Year after year, the Office of Federal Contract Compliance Programs (OFCCP) demands more and more of the federal contractors it audits. (See, for example, Circa’s blog on updates to the Supply and Service program Scheduling Letter and Itemized listing.) At the same time, many OFCCP Compliance Officers have become less forthcoming about how they review contractors’ audit submissions. (See Circa’s blog on the rescission of the “PDN rule” transparency provisions.)
Given this state of affairs, it is no wonder that Affirmative Action practitioners may groan on receiving a Corporate Scheduling Announcement List (CSAL) advance notice of audit. For these reasons, practitioners may consider reviewing whether, applying the OFCCP’s rules, the audit trip is necessary. There are several possible offramps, not generally available, but worth considering just in case.
Review for a possible offramp should your employer have a work location on a new CSAL. Even if there proves to be no way off, the review will be a useful exercise helping you — and your leadership – better understand the nature of your Affirmative Action obligations and the importance of your program to your company.
Unlikely Avenues
One – exceedingly rare – means of avoiding an audit is the “separate facilities waiver” found at 41 CFR Sec. 60-1.5. This is available only if the OFCCP certifies that a contractor or subcontractor’s facilities are “in all respects separate and distinct” (emphasis added) from the performance of the federal contract activity that creates jurisdiction at other locations.
OFCCP has pretty much blocked off another offramp. Prior to the Biden administration, the Agency provided “administrative closures” (closures without technical review) for audits of establishments (work locations) with less than 50 employees. The Biden administration now commonly requires an audit, even for these small establishments.
Is Your Employer a Federal Contractor Required to Maintain an Affirmative Action Plan?
Contractors with less than 50 employees do not need to maintain Affirmative Action Plans (AAPs). A contract or subcontract must be $50,000 or more to trigger the requirement of developing and maintaining an AAP under Executive Order 11246 and Section 503 of the Rehabilitation Act of 1973. A contract of $150,000 or more triggers the AAP obligation under the Vietnam Era Veterans’ Readjustment Assistance Act of 1974. See the OFCCP’s website on jurisdictional thresholds.
Review whether your employer currently has one or more federal contracts or subcontracts, whether the contract or contracts are open, whether there are purchase orders open, and whether current obligations are large enough to require an AAP. Use USASPENDING.gov to find this information. Make sure you search on all the corporate names your employer may use. If there is no open contract –if the work is completed or if there simply is no currently open purchase order – you may have an argument that OFCCP does not have jurisdiction. Make sure your data is correctly entered into the USASPENDING website, as OFCCP reviews this information when deciding what facilities to audit.
Even if you have multiple sizable contracts with the federal government, it is good practice to review where your employer’s obligations come from. If nothing else, you can report to leadership that your program supports the company’s ability to maintain X hundreds of thousands, X million, or X gazillions of dollars in federal contracts. (1)
Should Your Establishment be on the Corporate Scheduling Announcement List (CSAL)?
When a CSAL is posted, review the OFCCP’s methodology outlining how it develops the list to determine if your audit aligns with the selection criteria. Under the last published methodology (September 2023), an establishment should go off the list if the relevant federal contract:
The methodology also excludes reauditing locations currently under review, that recently completed reviews, or that are currently under conciliation agreements addressing issues identified during prior reviews.
“Single Entity” Review
If your employer has one or more federal contracts establishing OFCCP jurisdiction, and you have an establishment noted on the CSAL, is the contracted work you have identified relevant to the establishment under review? If not, you may have an argument that OFCCP should not audit your establishment.
Perhaps the location under review is a customer call center, and the contracts creating OFCCP jurisdiction involve so little customer-facing activity that call center work is irrelevant to them. The OFCCP may then treat the entity as a separate unit without an AAP obligation – unless the facility’s activities remain for other reasons so “closely related” to the parent company that operations form a “single entity.” To determine whether it has jurisdiction, OFCCP employs a single entity test to determine whether:
This gets tricky. Draw as many differences as you can between the establishment of the CSAL and the establishments in your program that work federal contract or contracts. Jurisdiction arguments are complex, so do this with legal support.
Conclusion
Don’t wait for the next round of CSALs to develop an in-depth understanding of why your employee is, or is not, required to maintain an AAP. Review in advance the grounds you may have to avoid audit of specific work locations.
Coordinate with HR and lines of business to understand the nature of your contracts and subawards. Keep the information for future use. This will help you make your jurisdiction arguments based on your understanding of your employer’s day-to-day activities, rather than relying on the details found in USASPENDING, which may not be accurate or up to date.
If an establishment in your program is on a new CSAL, dust off your review of contract history, review OFCCP’s CSAL selection methodology for updates, and review for possible “single employer” issues to determine if your establishment is properly on the list.
If you are on a CSAL, and there is an offramp, take it.
