How to Prepare for a Compliance Evaluation

By: Cheryl Lipton

Steps in the OFCCP Process

The Office of Federal Contract Compliance Programs (OFCCP) is part of the Employment Standards Administration (ESA) of the Department of Labor (DOL.) The OFCCP makes sure that Federal contractors and subcontractors comply with the non-discrimination (equal employment opportunity (EEO)) and affirmative action laws and regulations. The OFCCP monitors compliance of the EEO and affirmative action laws through random compliance evaluations and investigates individual complaints of misconduct.

The OFCCP conducts compliance evaluations to determine if Federal contractors:

  • Have nondiscriminatory hiring and employment practices
  • Take affirmative action to ensure equal employment opportunity to all applicants including the disabled and veterans.
  • Follow proper guidelines for employment decisions

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The Federal Contractor Compliance Manual (FCCM)

A good resource for contractors is the Federal Contractor Compliance Manual (FCCM). The manual is designed to provide background and guidance. There are eight chapters that provide a number of definitions and cover topics such as desk audits, on-site reviews and complaint investigations. The manual is available from a variety of online sources, including the OFCCP website.

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The Federal Contractor Selection System (FCSS)

The OFCCP uses the Federal Contractor Selection System (FCSS), a mathematical model intended to select contractors for compliance evaluations who are most likely to be in violation of affirmative action laws. DOL describes the FCSS as “an administratively neutral selection system that uses multiple information sources and analytical procedures to identify Federal contractor establishments for evaluation.” See Federal Contractor Selection System (FCSS) — Questions and Answers.

The OFCCP uses a twice-yearly cycle for scheduling compliance evaluations. For example, in fiscal year (FY) 2009, it released 2500 names on October 1, 2009 and 5000 names on March 9, 2009. The OFCCP regional offices work through the lists methodically and offices may continue to schedule using these lists through September 30, 2009 (the end of its FY). The FCSS is not the only mechanism that the OFCCP uses for selecting contractor establishments for evaluations. However, some establishments scheduled for review are not on the FCSS list.

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Scheduling Letters and Corporate Scheduling Announcement Letters (CSAL)

A CSAL is a courtesy notice listing contractor establishments selected to undergo a compliance evaluation during the next scheduling cycle. A Scheduling Letter is an OMB-approved letter that starts the evaluation process. The letter notifies the company that it is scheduled for a compliance evaluation and requests copies of the contractor’s APP(s) and supporting data.

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The Compliance Evaluation Process

In January 2011, the OFCCP instituted a new compliance evaluation program, the Active Case Evaluation (ACE) procedure. Under ACE, the OFCCP will audit a larger amount and greater scope of material during each compliance evaluation than it has in the past.  A traditional compliance evaluation under ACE will include one or more of the following:

  • Compliance Review (This proceeds in three stages: desk audit, on-site review and off-site analysis.  A “full compliance review” consists of all three stages).
  • Compliance Check
  • Off-site Review of Records
  • Focused Review
  • Pre-award Compliance Evaluation

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Desk Audits

Desk audits are considered a major part of a compliance review. Under ACE (see above), every compliance evaluation must include a desk audit, no matter what other methods of investigation are used as well. The contractor will receive a scheduling letter requesting information. The contractor should review its government contracts to ensure that it is indeed covered and it should advise the OFCCP if it does not believe it is a covered business. It should tell the OFCCP if none of the contractor’s facilities or corporate entities has any government contracts or the contractor does not otherwise meet the threshold requirements for developing an Affirmative Action Plan (AAP). The OFCCP has the burden of proving coverage and the contractor is not obligated to provide any information until coverage is established.

Before submitting any documents, the company should conduct its own internal desk audit to verify that it is in compliance with the laws and regulations. The contractor has 30 days to provide the requested information. An equal opportunity specialist (EOS) from the OFCCP will review the contractor’s AAP and supporting documents (away from the work site) to determine whether the contractor is in compliance. The EOS has 60 days to review the materials.

Sometimes, the OFCCP offers to provide technical assistance to the contractor. Receiving technical assistance will not preclude a finding of deficiencies nor will it prevent the imposition of remedies for any discrimination found by the agency. Thus, contractors should consider carefully whether to accept the OFCCP’s offer of technical assistance.

The EOS will first consider whether the contractor has made reasonable efforts to develop an acceptable AAP. If the AAP is seriously deficient, then the OFCCP will issue a notice to show cause and the evaluation will be suspended. If the EOS finds reasonable efforts to create an AAP, then he or she will determine whether the AAP is acceptable. The AAP review period generally covers at least one full AAP year.

Under the acceptability phase, the EOS will consider:

  • Whether the contractor’s workforce analysis complies with the technical requirements.
  • Whether there are workforce areas where minorities and/or women are concentrated or underrepresented.
  • The contractor’s job groups, availability analysis, goals and efforts to meet the goals.
  • Whether the contractor’s AAP satisfies all of the federal contractor affirmative action statutes and regulations.

In Impact Ratio Analysis: the OFCCP will review the contractor’s personnel practices, (such as hiring, promotion, and termination practices), to determine whether adverse impact on females or minorities exists. Lastly, the EOS will complete a standard compliance review report summarizing its analyses, findings, and conclusions.

Desk Audits are covered in Chapter 2 of the FCCM.

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On-site Review

This will be conducted at the contractor’s establishment. The OFCCP will investigate unresolved problem areas identified during the desk audit and verify contractor execution of its AAP. The OFCCP will also look for potential discrimination by examining the contractor’s personnel and employment policies, inspecting and copying employment documents and interviewing employees, supervisors, managers, and hiring officials.

Some on-site reviews will be scheduled on a random rotating basis even if everything checks out at the Desk Audit. There are five basic parts to the on-site review:

  • Entrance conference (between the EOS and the chief executive officer or chief management official (or his or her designee) for the facility)
  • Facility tour
  • Document Review
  • Interviews
  • Exit conference

On-site reviews are covered in Chapter 3 of the FFCM.

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Off-site Reviews

The EOS may remove some documents for further review off-site.

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Compliance Checks

  • Review of documents to ensure that the contractor is maintaining proper records.
  • The contractor will receive a scheduling letter requesting the documents.
  • Once the review is completed, the contractor will receive a closure letter.

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Focused Reviews

An on-site review of one or more components of the contractor’s organization or one or more aspects of the contractor’s employment practices. Compliance officers use the focus review to target selected employment issues of an institution or employer.

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Pre-award Compliance Evaluations

OFCCP will conduct a pre-award evaluation of any prospective contractor entering into a contract of $10 million or above and its known first-tier subcontractors with subcontracts of $10 million or above before the award of a contract unless the OFFCP has evaluated and found the contractor or subcontractor to be in compliance within the past  two years.

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Construction Industry Compliance Program

The major focus of the review of a construction contractor is the contractor’s trade workforce within a particular geographical area. However, the contractor’s entire workforce may be the subject of review. Federally assisted construction contracts are subject only to the E.O. 11246. The compliance review process will include:

  • Pre-Review Preparation
  • Onsite Review
  • Compliance Review Report
  • Notification of Compliance Review Results

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Corporate Management Compliance Evaluations (CMCE)

A more focused evaluation process is the Corporate Management Compliance Evaluation (CMCE), which focuses on mid-level and senior corporate managers. Contractors must avoid discrimination and make good faith affirmative efforts to guarantee equal employment opportunity in developing, selecting and treating mid-level and senior corporate managers. CMCE is designed to make sure qualified minorities, women, persons with disabilities and protected veterans do not face artificial barriers to advance into and within mid-level and senior corporate management. The CMCE reviews contractor’s development and selection processes for corporate management positions and whether any unlawful discrimination exists. Supply and service contractors with 4,000 or more employees in the organization and more than one reporting subordinate establishment are included on the CMCE List.

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Employee Complaints

The OFCCP investigates complaints against contractors made by an employee, former employee, applicant for employment or by a third party alleging specific violations of Executive Order 11246, § 503 of the Rehabilitation Act or the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRA). The OFCCP’s investigation varies based on the factual circumstances of each complaint.

Complaints under E.O. 11246 must be filed within 180 days of the incident, unless good cause is shown for an extension. Complaints under the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRA) and §503 of the Rehabilitation Act must be filed within 300 days of the alleged violation, unless good cause is shown for an extension. For additional information about these laws see Monster’s The OFCCP: Overview. Complaints alleging employment discrimination in violation of E.O. 11246 are generally referred to and investigated by the Equal Employment Opportunity Commission (EEOC) pursuant to the EEOC/OFCCP Memorandum of Understanding.

The OFCCP uses a Complaint Administration System that tracks and monitors the processing of complaints filed with OFCCP. An investigation includes:

Typically, investigations are completed within 60 days. Settlement can occur at any time of the process. If the OFCCP finds a violation, then the DOL invites the contractor to resolve the complaint through conciliation.

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Legal Disclaimer: None of the information provided herein constitutes legal advice on behalf of Monster.