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In November 2022, OFCCP asked for Office of Management and Budget (OMB) approval of changes to the Supply and Service program “compliance review scheduling letter” that provides federal contractors with notice of audit, and the “itemized listing,” included with the scheduling letter, which identifies the information contractors must provide when audited.  See Circa’s blog “OFCCP Proposes Supersizing Contractors’ Initial Audit Response” for detail.

The OMB approval process requires public comment under the Paperwork Reduction Act.  On April 18, 2023, OFCCP updated its request.  See the Agency’s Supporting Statement here for its discussion of comments received.  View the proposed updated changes here.

The OFCCP updates address only a few of federal contractors’ many concerns.  Unresolved issues include whether many proposed changes exceed OFCCP’s authority, and whether the mountain of additional information OFCCP seeks will bog down the audit process.

An overview of the changes gives you an idea of the scope of the proposal.  As updated, they include:

  • Scheduling letter
    • Email option for delivery of scheduling letter.
    • Colleges, universities, and “campus-like settings” must submit all AAPs maintained in the municipality of the entity noted for audit.
    • Optional electronic submission of desk audit via OFCCP portal.
    • Enforcement proceedings if desk audit not submitted within 30 days of notice.
  • Itemized listing
    • Item 4: Additional minority and female availability to include identification of pools of promotable, transferable, and trainable employees.
    • Item 7: Documentation on action-oriented programs relating to “any problem areas” identified via the 41 CFR 2.17(b) review of compensation system.
    • Item 8: Documentation of outreach to individuals with disabilities, the effectiveness of the outreach, and alternate outreach efforts where prior outreach proved ineffective.
    • Items 11: Steps taken to correct “any” underutilization of individuals with disabilities.
    • Item 12: Documentation of veteran outreach efforts, the effectiveness of the outreach, and alternate outreach efforts where prior outreach proved ineffective.
    • Item 15: Veteran benchmark clarification (calculate for the current AAP year).
    • Item 16: Post-secondary institutions to produce Integrated Postsecondary Education Data System (IPEDS) filings (IPEDS elements akin to the EEO-1 Report).
    • Item 19:
      • Requires two snapshots of compensation data:
        • One as of current plan’s workforce
        • Second (new) as of prior plan’s workforce
      • Temporary employees, including third-party Agency employees, may be counted.
      • Provide all factors used to set compensation for all employees policies related to compensation
  • Item 21: Documentation of employment recruiting, screening, and hiring mechanisms; specifically references use of Artificial Intelligence (AI)
  • Item 22: Report steps used to perform 2.17(b)(3) review of compensation system (seeks statistical data that the regulation does not require contractors to generate)
  • Item 23: Reasonable accommodation policy documents, plus documentation of all accommodation requests and their resolution
  • Item 24: Copies of EEO policies, arbitration and other employment agreements, and EEO compliant procedures
  • Item 25: Documentation of contractor’s review of personnel processes

Despite unequivocal and detailed statements of concern by groups OFCCP refers to as “employer associations” – including the National Industry Liaison Group (NILG) [1]; American Association for Access, Equity and Diversity (AAAED); the Institute for Workplace Equality (IWE) and many others — OFCCP made few changes to the proposal.  Areas changed include:

  • Item 7: Changes the new production requirement for action-oriented programs correcting “any” problem areas identified through the compensation review required under 41 CFR 2.17(b).  Contractors may provide documentation on programs rather than create a list of them as required in the original request.
  • Item 21: Language change concerning new requirement for production of “information and documentation” on selection policies and practices, including the use of Artificial Intelligence (AI).
  • Item 18(c): Removes requirement in November 2022 version that contractors identify promotions as “competitive” or “noncompetitive”; removes requirement for information on supervisors and compensation.
  • Item 18(d): Removes requirement in the November 2022 version that contractors provide termination reasons.
  • Item 24: Contractors need not include individual employee contracts when responding to the proposed new requirement for production of EEO policies, complaint procedures and employment agreements.

Even as amended, these 2.17(b) compliance, selection procedures, AI and other requirements represent an important increase in the work involved for the federal contractor in assembling a desk audit response.

 

A Glaring Omission

OFCCP ignored contractors’ well-supported concerns about how long it will take to respond to the proposed updated itemized listing. The OFCCP Supporting Statement recommends maintaining the current 30-day response requirement.

Consider how only one of the new audit requirements will impact the time it takes to create a desk audit submission.  Item 19 as updated would require that contractors produce two compensation snapshots, the standard one for the plan year under review and a new, second snapshot for the prior year.  The November OFCCP Supporting Statement referred to this as “only seeking an additional snapshot.”  In its updated Supporting Statement, OFCCP maintains the second snapshot will be easy to generate because contractors already “have systems in place to provide this information.”  OFCCP makes it sound as if generating an additional year of compensation data is as easy as pressing Control Shift F11.   Contractors know that assembling a compensation roster is a time-consuming business involving combining, reviewing, and analyzing complex data commonly housed in different, mismatched HR systems.

Respondents to a NILG survey maintain it would take 60-90 days to prepare the additional information OFCCP proposes.    An Institute for Workplace Equality survey estimates it would take 89 hours to prepare the new desk audit response.  Both suggest it will take three times longer than the Agency estimates.

Comments by “employer associations” have been blunt:

“If adopted, the Proposal would render every compliance evaluation a full-blown pattern or practice investigation, rather than a reasonable focus on general compliance and areas where indicators show that a problem may exist…. [B]urdening every contractor with needless requests for information is unfair and creates pointless busy-work for contractor personnel already overwhelmed with compliance responsibilities.”

“The additional data and information that the OFCCP is proposing to collect will increase the burden on OFCCP’s compliance officers conducting a desk audit.  There will be a significant number of additional hours to catalogue, analyze, evaluate, and report on the additional information requested in the proposed scheduling letter and itemized listing.  This increased burden could be catastrophic for OFCCP’s enforcement efforts.”

“Many of the proposed changes reflect an oversimplified and unrealistic notion of the processes contractors follow to collects, reconcile and analyze voluminous data sets as part of their annual AAPs.”

“The OFCCP’s burden estimate is untethered from reality and cannot provide the required basis for the changes the Agency proposes.”

 

Conclusion

Even a short list of the changes OFCCP seeks is startling: colleges and universities subject to multiple concurrent audits, a second compensation report, and new reporting in relation to the 2.17(b)(3) review of compensation system requirement, just to start.

The Agency states that it is more efficient to have full information at the outset of a desk audit “rather than waiting to request the documentation only if the desk audit reveals disparities.”

Time has proven that the opposite is true. Too much information too soon is too burdensome on the contractor and will bog down the audit process. The audit process as currently designed requires the production of summary documentation at the outset. OFCCP uses this information to triage audits and determine what subset of audits will undergo full review.  This focuses Agency resources on reviews more likely to discover deficiencies or discrimination than the norm. In the past, when the Agency tries too much too early its results suffer.  See Circa’s blog concerning OFCCP’s on-off history of addressing every audit as a full audit.

OMB has significantly limited the scope of OFCCP requests to amend the scheduling letter in the past, most recently in 2014. There are many reasons for OMB to cut back OFCCP’s current request.  Many changes should be put on hold until OFCCP secures changes to the supply and service regulations. (OFCCP is on record as intending to file a change request soon.) Other changes should be rejected because they promise more burden than benefit.

Civil rights groups commenting in support of OFCCP’s original proposal maintained, without substantiation, that the Agency “tailored” its request to “minimize burden.” Nothing could be further from the truth.

Let’s hope that OMB uses shears to tailor OFCCP’s updated request.

 

 

[1] The author is an NILG Board member.

Author

Paul McGovern
Managing Partner
Praxis Compliance

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