This is the first article in a two-part series on OFCCP’s proposed audit practice changes. See here for our article on OFCCP’s proposals for “Focused Reviews” and “Compliance Checks.” We encourage you to participate in the public comment period concerning these changes before it closes on June 7th.
The OFCCP has been going at full speed for more than a year now, with Directives and announcements coming out, it seems, every day. To keep the momentum going, the OFCCP now has six Scheduling Letters in public review and comment. OFCCP’s plans have some things old, some things new, and one thing (additional monitoring detail) already off the table.
The Office of Management and Budget (OMB), which runs the review process, is asking for contractor input. The OMB balances the “burden” of contractors providing requested information with the usefulness of the information obtained. The comment periods end in early June, depending on the Scheduling Letter type. In the past, the public review process has led to significant changes in OFCCP’s plans. For example, the current veterans and disability plan regulations look a lot different in their 2013 proposed and 2014 final forms.
This article focuses on the changes to the standard “supply and service” desk audit that most contractors are familiar with. You can find the proposed scheduling letters here.
Our follow-up article will address the OFCCP’s new “Focused Review” and updated “Compliance Check” initiatives.
Per several of the proposed Scheduling Letters, if your audit notice is sent more than 6 months into your plan period, you would have to provide hire, terminations and promotions data “for every completed month in the current AAP year.” (So, if you have a calendar year plan and receive a Scheduling Letter in mid-September, your monitoring data would run from January 1 to August 30.) Since releasing the Scheduling Letters for comment, OFCCP representatives have said that you won’t have to provide data beyond the standard 6 month monitoring period detail unless you want to.
Another thing: OFCCP Director Leen is saying that the Agency is going to pay much more attention to your mandated review of outreach effectiveness than it has in the past. So, review your outreach program!
The current standard Scheduling Letters expire June 30, 2019 (see the current standard “Supply and Service” scheduling letter here. The expiration date of all current Scheduling Letters will be extended, however, until updated versions come into effect. It’s hard to say how long it will take OMB to finish its review. Assume the OFCCP wants to get the new Scheduling Letters in place by October 1, 2019, the start of its 2020 fiscal year. Things may move quickly.
Identifying your three largest “dollar value” subcontractors
This new requirement is in the Scheduling Letter itself, not the “Itemized Listing” section that follows it. Historically, subcontractors were not subject to much OFCCP oversight unless they were federal government contractors on their own. This new request is the government’s way of identifying subcontractors for possible review. The Agency made this a difficult job, however, by asking which of your subcontractors has the largest role in the federal contracts your company fulfills. Many contractors will find this requirement challenging.
Providing minority sub-group availability and placement goals
Items 4 and 6 of the Itemized Listing move beyond the current “minority all” availability and goal reporting to focus on minority sub-group analysis and reporting. While you might already be doing this review on your own, preparing this detail for audit will be time consuming. Additionally, the proposed sub-group goal review will increase the likelihood that your submission has indicators that the OFCCP will want to follow-up on in audit.
Providing an analysis of your compensation system
The requirement for analyzing your compensation program to determine whether there are race/gender disparities is not new. Providing your actual compensation review to the OFCCP when audited is new. The good news is that your Executive Order 11246 review of your “compensation system” need not be hyper-technical. We outlined the critical elements of a “back of the envelope” summary compensation review in AJE’s April webinar on audit practices.
In addition to identifying the job groups involved in promotions (the “to and from” and related detail), the Agency now wants you to identify individual applicants. What is the point of this? Even if your reporting system is good, your adverse impact results could be, well, random –skewed, for example, because many promotions are “non-competitive,” 1:1 career development and succession planning appointments.