On November 30, 2018, the Office of Federal Contract Compliance Programs (OFCCP) issued three new directives that it describes as reinforcing OFCCP’s “commitment to fulfilling its enforcement mission with more accountability and efficiency, as well as [its] efforts to maximize the effectiveness of compliance assistance outreach to assist contractors in meeting their responsibilities.”1
Compliance Review Procedures
OFCCP’s compliance review procedures change with each presidential administration.
In July 2003, the Bush administration introduced Active Case Management (ACM), which concentrated agency resources on identifying and remedying cases of systemic discrimination.
In December 2010, the Obama administration adopted a different approach, which it called Active Case Enforcement (ACE). Under ACE, every OFCCP audit reviewed compliance with all three of the laws OFCCP enforces: Executive Order 11246, Section 503, and VEVRAA. Additionally, under ACE, OFCCP increased the frequency of mandatory onsite inspections from every 50th to every 25th scheduled audit. Not surprisingly, this rigid approach to compliance resulted in longer and more burdensome audits.
Under the current administration, OFCCP has been implementing changes in policies and procedures to increase the number of compliance reviews, shorten desk audits, and conciliate issues more efficiently. In consideration of these changes, OFCCP states in Directive 2019-01 that there is no continuing need for the Obama administration’s Active Case Enforcement procedures and that it is, therefore, rescinding the ACE procedures.
Directive 2019-01 then simply directs OFCCP staff to follow the compliance evaluation procedures prescribed in the Federal Contract Compliance Manual (FCCM) and other agency guidance such as the recent directives on transparency, compensation analysis,2 the use of predetermination notices,3 and focused reviews.4
By rescinding ACE, OFCCP will now have greater flexibility in how it conducts audits. Contractors are likely to benefit from this change with OFCCP being more willing to quickly close compliance reviews upon receiving a satisfactory response to its initial audit inquiries.
Although Directive 2019-01 does not, itself, describe OFCCP’s compliance review procedures, it explicitly references several policies or procedures:
- OFCCP will publish its scheduling methodology in OFCCP’s Freedom of Information Act (FOIA) Library.
- Contractor establishments that have undergone a compliance evaluation will be exempt from another neutrally scheduled compliance evaluation for 24 months from the date of closure of the compliance evaluation or the date OFCCP accepts a final progress report, unless a different exemption period pursuant to other OFCCP policies and/or programs is provided and agreed to by OFCCP and the contractor.
- While onsite, OFCCP may evaluate all aspects of contractor compliance under its three programs, limiting onsite reviews to the nature or scope of the indicators or concerns that triggered the onsite review.
- The Compliance Officer should always try to work with the contractor to obtain proactive corrections to deficiencies at the desk audit when it identifies non‐material violations with no additional indicators of discrimination.
Early Resolution Procedures
OFCCP’s Early Resolution Procedures Directive (DIR 2019-02) is intended to increase compliance evaluation efficiency and improve contractor compliance by creating early resolution procedures for certain types of violations.
If OFCCP finds a non-material violation5 that can be corrected immediately and no evidence of material violations or discrimination, it can close the audit with a simple closure letter that references the non-material violations and remedies, rather than a formal conciliation agreement.
Alternatively, a contractor with multiple establishments and material non-discrimination violations6 may be permitted to resolve the violations though an Early Resolution Conciliation Agreement with Corporate-Wide Corrective Action (ERCA). Under an ERCA, a contractor must review a negotiated number of remaining establishments for similar violations during the progress-reporting period and, if necessary, correct the violations. As an incentive to sign an ERCA in this instance, OFCCP will not schedule a compliance evaluation for the originally audited establishment for a five-year period. This exemption from future audits does not apply to the other establishments that were reviewed as part of the ERCA.
Lastly, a contractor with multiple establishments and material discrimination violations7 may also enter an ERCA. Under this scenario, OFCCP will not schedule any of the contractor’s establishments covered by the ERCA for a new compliance evaluation for a five-year period.
Opinion Letters and Help Desk
Recognizing that compliance assistance is an important tool for OFCCP to achieve its mission, OFCCP issued Directive 2019-03. Under this directive, OFCCP will enhance its Help Desk by making certain inquiries and responses available and searchable on OFCCP’s website. Additionally, OFCCP will develop a process for issuing Opinion Letters that provide guidance on applying OFCCP regulations to fact-specific situations. Importantly for contractors that may rely on an Opinion Letter or other guidance materials, OFCCP has indicated that it will consider whether a contractor acted consistently with an Opinion Letter, Directive, FAQ, or Help Desk answer when determining whether to cite a violation for related actions.