Member Columns

OFCCP COMES A KNOCKIN'

Federal contractors may soon encounter a stronger, far more aggressive enforcement effort by the Office of Federal Contract Compliance Programs (OFCCP), a division of the U.S. Department of Labor. The OFCCP monitors government contractors' compliance with the non-discrimination and affirmative action requirements of Executive Order 11246 and can sue noncompliant contractors. The agency recently launched a new, aggressive compliance evaluation system which emphasizes its efforts to eradicate discrimination and which puts affirmative action on the back burner. The new system sharpens the agency's tools in its hunt for big back pay settlements and has several key parts.

• A New Discrimination Targeting Strategy: OFCCP will select approximately 3,500 contractor facilities facilities for compliance evaluations (or "audits") based on an entirely new Federal Contractor Selection System (FCSS). The FCSS uses a mathematical model to target contractor facilities that rank as the "worst offenders" on the agency's new, secret discrimination index and that are most likely to generate at least $100,000 in back pay to remedy past discrimination. OFCCP claims that it will be "loaded for bear" when auditing facilities targeted by the FCSS. The FCSS replaces the Equal Employment Data System (EEDS), which the agency has used for targeting contractors since the early 1980s and which was based on affirmative action concerns rather than discrimination issues.
  
• Increased Focus on Discrimination: OFCCP has recently announced that it will henceforth focus "its enforcement activities on finding and resolving what might be called 'systemic' discrimination." OFCCP will not only use FCSS to target facilities most likely to have discriminated against women and minorities, but the agency will also further narrow its focus based on its review of contractor data during the desk audit phase of a compliance evaluation. According to the agency, it will use "the initial stage of its compliance evaluation process, the desk audit, to determine if significant investigative resources should be devoted to a compliance review. If the desk audit reveals significant indicators of systemic discrimination, OFCCP will continue the investigation. If the desk audit does not reveal such indications, OFCCP will close the review unless there is another basis to believe that an on-site review would be appropriate.
  
• "New Statistical Firepower: Over the past several months, OFCCP has created a new division of Statistical Analysis and staffed it with several Ph.D. statisticians. OFCCP has been touting this new group's capacity to match the sophisticated statistical analysis that contractors routinely use when defending against serious discrimination claims. OFCCP pledges to stand toe-to-toe with contractors in a looming battle of experts.
  
• Glass Ceiling Audits: According to inside sources, OFCCP may abandon special Corporate Management Reviews ("CMRs" or so-called "Glass Ceiling" audits). If a corporate headquarters location is identified for audit by the new targeting system, that audit will probably be no different from the audit of any other "worst offender" location. Corporate headquarters locations may not be singled out for special audits in the new FCSS, however.
  
• Notice of First Quarter Audits: OFCCP will soon send letters to each individual "worst offender" contractor facility targeted for audit during the first three months of OFCCP's fiscal year, which began on October 1, 2004. This advance notice approach represents a significant change from past OFCCP practice. Previously, OFCCP gave individual contractor locations only 30-days notice of an audit.
  
• Notice of Fiscal Year Audits: Within the next several weeks, OFCCP hopes to send letters to the corporate headquarters of every contactor whose facilities will be audited at any time during the fiscal year ending September 30, 2005. Although OFCCP will send those letters only to the headquarters, the letters will list every specific "worst offender" location identified by the FCSS for audit this fiscal year. OFCCP has also announced that the agency will put a cap on the number of locations of a single contractor that will be audited in any one fiscal year. Apparently, if a contractor's headquarters facility does not receive one of the "corporate target" letters, none of its locations will be audited this fiscal year. The list of targeted locations contained in the corporate target letters will include those locations selected for First Quarter audits.

Additional Information

Contractors that have been identified as a potential "worst offender" and receive either a First Quarter audit notice or a Corporate Target letter will have a unique advance opportunity to make certain that they are prepared for OFCCP's new focus on ferreting out discrimination. Ogletree Deakins has a specialized team of experienced lawyers ready to assist companies with AAP preparation as well as statistical analyses of their employment data and with OFCCP audits. Should you have any questions, please contact the Ogletree Deakins attorney with whom you normally work or the Client Services Department at 404-881-1300 or via e-mail at clientservices@ogletreedeakins.com.