Last week was a fairly newsworthy week at the Office of Federal Contract Compliance Programs (OFCCP).  For federal contractors who long had to deal with secrecy and “gotcha” attitude of the prior administration, the new administration is a sigh of relief.  

First, the agency under Director Harris is promising to be more transparent and communicative in the selection and audit processes.  The agency is also looking at how to speed up audits with a likely replacement of the Active Case Enforcement (ACE) initiative with a new Active Case Management (ACM) approach.  OFCCP is revising its approach to compensation by retracting Directive 307.  Finally, the agency is looking to reduce the backlog of cases starting with those over 1,000 days old.

In particular, last Wednesday the OFCCP unprecedently released the process for audit selection of contractors, at least for 2018. The processes use data from both the federal procurement system and EEO-1 reports.  First, the process starts by downloading federal contract information from archived files of the Federal Procurement Data System–Next Generation (FPDS-NG) for years 2015, 2016, and 2017. The downloaded transactional data was consolidated to create a single record for each contract.

Next, OFCCP removed: (1) cancelled contracts, (2) contracts associated with debarred companies, (3) contracts that expired by January 31, 2017, (4) contracts valued at less than $50,000, and (5) contracts awarded to federal, state, local, municipal, tribal, city, and foreign governments, school districts, or construction companies. Contracts that did not have any modification in the last 15 months were assumed closed or cancelled and were removed. OFCCP considered the remaining records as active contracts within OFCCP’s jurisdiction.

If a contractor had only one contract at a given establishment address, the contract record was called the "Establishment Record," but if a contractor had multiple contracts at the same physical address, the contract record with the farthest expiration date became the Establishment Record: all contract numbers from other contract records were added to it. These establishments were called "Direct Establishments." Company names and addresses of Direct Establishments were matched against the EEO-1 database, and for those that matched EEO-1 records, OFCCP added the parent name, establishment name, unit number, headquarter number, establishment status, employee count, and contact information from the EEO-1 records to the respective Establishment Records.

Establishment Records were further consolidated at the parent level to capture all contracts held by each parent company. If a parent had only one establishment with a contract(s), the "Parent Record" was the same as the Establishment Record. If a parent had multiple establishments with contract(s), the Establishment Record that had the farthest contract expiration date became the Parent Record and all contract numbers from all its establishment records were added to it. This process created a Contract File, an Establishment File, and a Parent File.

For each parent in the Parent File, OFCCP extracted all establishments with 100 or more employees from the EEO-1 database and added them to the Establishment File. These extracted establishments did not have direct contracts, but they fell within OFCCP’s jurisdiction because their parent entity had a covered direct contract. These additional establishments were called "Associate Establishments." OFCCP then added contract information from the parent record to the respective Associate Establishment records, including: contract numbers, contract dollar values, and contract expiration date. All of these Direct and Associate Establishments became the "Available Pool" for scheduling.

With respect to Functional Affirmative Action Program agreements (FAAPs), all FAAP establishments and those establishments of a contractor not included with the FAAP were added to the Available Pool. Contract information relevant to FAAP companies was retrieved from the Parent File and added to the respective FAAP functional units and establishments.

OFCCP then reduced the Available Pool by removing establishments who were currently under review, had completed a review within the last five years, were currently under monitoring pursuant to an ongoing conciliation agreement/consent decree, had a separate facility exemption, had contracts expiring before March 31, 2018, or were available for scheduling from an earlier list. Using EEO-1 data, OFCCP removed Direct Establishments with less than 70 employees. Finally, OFCCP removed independent subsidiaries of corporations that did not have contract coverage.

OFCCP capped the list at 1,000 (given its available resources) and assigned those establishments eligible a unique serial number for identification and an OFCCP district office code based on the establishment’s physical address.  It should be noted that previously there were four separate lists that OFCCP had used for scheduling:  FAAP, University, Corporate Management Compliance Evaluation-Corporate Headquarters, and regular Establishment List.  Each record in the Available Pool was labelled as: Direct Contract Establishment (D), Associate Contract Establishment (A), Corporate/Division Headquarter (M), FAAP Functional Unit (F), or University (U).  These various lists were combined into one list.

This process then created separate pools of available establishments for each district office.  Each OFCCP district office’s share of the total list was computed based on FTE count.  The Available Pool was ordered by employee count (highest to lowest) within each district office. OFCCP applied the following criteria to select the specific number of establishments that each district office received for scheduling: (1) priority for establishments with higher employee count regardless of Direct or Associate establishment status, (2) no more than 10 establishments of a parent company in the entire scheduling list, (3) no district office to have more than four establishments of the same company, (4) no more than two functional units of each FAAP company, and (5) no district office to have more than two corporate/regional headquarter (CMCE), two FAAP Units, and one university for review.

This release was a great step in the right direction to help compliance and HR explain how a company could be audited, it and confirms that OFCCP cannot audit a company simply because it wants to. 

Source:  OFCCP 4/17/18