Government Contractor Compliance & Regulatory Update

OFCCP Extends Deadline For Contractors To Object To Release of EEO-1s

As previously reported, OFCCP has received a FOIA request seeking federal contractors’ and subcontractors’ EEO-1 reports from 2006-2020.  On August 19, 2022, OFCCP published a notice informing contractors and subcontractors of that fact and giving them until September 19, 2022 to submit any written objections to releasing their reports.

On September 15, 2022, OFCCP extended the deadline to submit written objections.  Now contractors have until October 19, 2022 to subject objections.  In its announcement, OFCCP explains the reasons for the extension.  First, it notes “numerous contractors and contractor representatives have contacted the agency requesting an extension of time to submit objections.”  Second, OFCCP has received questions from contractors asking “whether they are included in the universe of Covered Contractors during the requested timeframe.”  To address this issue, OFCCP will be “emailing contractors that OFCCP believes are covered by this Freedom of Information Act (FOIA) request, using the email address provided by contractors that have registered in OFCCP’s Contractor Portal and the email addresses provided as a contact for the EEO-1 report.”

OFCCP has a webpage containing answers to frequently asked questions, and advises contractors that they may contact its FOIA Help Desk at 1-800-397-6251 with questions not covered by the frequently asked questions page.

A discussion of the FOIA request and details about filing objections can be found here.

OFCCP Warns Contractors That Have Not Certified AAP Compliance To Do So By September 1, 2022

Earlier this year, OFCCP launched its “Contractor Portal,” which “[c]overed federal contractors and subcontractors (“contractors”) must use … to certify, on an annual basis, whether they have developed and maintained an affirmative action program for each establishment and/or functional unit, as applicable.” Contractors were required to certify whether they had developed such AAPs by June 30, 2022.

In a bulletin transmitted on August 29, 2022, OFCCP encourages contractors who have not certified to do so “as soon as possible,” noting that:

Contractors that have not certified will be more likely to appear on OFCCP’s scheduling list than those that have certified their compliance with AAP requirements. Contractors that have not certified compliance include those that have not utilized the Portal to certify whether they are meeting their AAP requirements, as well as those contractors that have certified they have not developed or maintained an AAP.

Even so, OFCCP makes clear it has “not extended the June 30[, 2022] deadline,” suggesting those that certify after the deadline are still subject to increased likelihood of audit selection.  However, it notes contractors that missed the deadline would benefit from certifying now:

[C]ontractors that have not certified compliance by September 1, 2022, will be included on a list provided to federal agency contracting officers. The purpose of this list is to enable contracting agencies to notify contractors of their certification obligations, thereby assisting OFCCP in securing compliance.

Contractors that have not certified should consult with counsel to determine their best next steps.

We previously reported on the certification process here. OFCCP also provides resources on its Contractor Portal website, including a user guide and FAQs. Any technical issues should be submitted to the OFCCP Contractor Portal Technical Help Desk by submitting a request form. The Help Desk can also be reached by telephone at 1 (800) 397-6251.

We will continue to monitor and report on developments on this and other OFCCP-related matters on this blog.

OFCCP Launches Construction Contract Award Portal

OFCCP has launched its new online portal: the Notification of Construction Contract Award Portal (NCAP). NCAP is expected to modernize how OFCCP receives required notices about construction contract and subcontract awards by eliminating the need to submit contract award information by mail or email.

According to the notice, “NCAP provides contracting officers, contractors, and applicants seeking federal assistance for construction projects (such as state DOTs), a more efficient and secure electronic means to submit a notice to OFCCP within 10 working days of an award of a federal or federally assisted construction contract or subcontract in excess of $10,000.”

Contractors will be able to securely and efficiently upload awarded contract information using a single or bulk upload.

The portal, including a comprehensive user guide, can be accessed here. How-to videos providing instruction on setting up an account in NCAP, submitting single or multiple award notifications, and viewing previously submitted award notifications are available here, and FAQs will be forthcoming.

OFCCP Revises Its Pay Equity Directive

As we previously reported, in March of this year, OFCCP issued its first directive of the Biden Administration – Directive 2022-01 (the “Directive”) – which addressed the issue of contractors’ obligations to conduct analyses of their compensation systems, as well as the agency’s expectations regarding providing those analyses when under audit.  The Directive received a lot of (mostly negative) attention, for appearing to indicate the agency would demand privileged pay equity analyses during audits, as well suggesting that contractors are obligated by regulation to conduct full pay equity analyses.

Now, five months after issuing the Directive, the agency has issued significant revisions to it.  As summarized in its announcement, the Directive has been revised in three main ways:

  1. It explicitly reaffirms the agency’s position that it does not require the production of attorney-client privileged communications or attorney work product.
  2. It identifies the documentation that OFCCP requires from a contractor to determine that the contractor has satisfied its obligation to perform a compensation analysis.
  3. It explains the documentation required from a contractor when its compensation analysis identifies problem areas to demonstrate that it has implemented action-oriented programs.

It also removes references to “pay equity audits,” replacing the phrase with “compensation analysis,” in order to, as OFCCP Director Jenny Yang contends, “avoid any confusion regarding the nature of a contractor’s obligations.”

OFCCP “reaffirms” (or reverses) its position on production of privileged materials.  With respect to production of privileged information, the Directive now states that the “Directive is not intended to encourage waiver of privilege.  Rather, this Directive informs contractors that, where they maintain this information in non-privileged form, making it available can assist OFCCP in conducting a more efficient compliance evaluation.”  While the agency characterizes this as a “reaffirm[ation],” it is clearly an effort to reverse the clear impression that the agency would be demanding privileged information the original Directive generated.

Even so, the agency makes clear that contractors will not be permitted to simply claim their compensation assessments are protected from disclosure during an audit.  The Directive provides that “[c]ontractors will not be found in compliance with their compensation analysis obligations if they simply invoke privilege and provide OFCCP with no or insufficient documentation of compliance.”  As discussed below, OFCCP maintains contractors have methods of confirming compliance without revealing privileged information.

OFCCP details what it expects to see from contractors regarding their compensation assessments.  The Directive contends that contractors are required to conduct analyses of their compensation systems and provide documentation “confirm[ing] that the contractor has evaluated its compensation systems for race-, gender-, or ethnicity-based disparities.”  The agency notes that “the most useful form of documentation is a contractor’s full compensation analysis because it allows OFCCP to understand how the contractor evaluates its compensation systems in practice,” and “encourage[s]” contractors to provide their “full compensation analyses available where OFCCP identifies concerns during a compliance evaluation.”

Where a contractor’s full compensation analysis contains privileged communications or protected work product, the Directive provides that the contractor “may fulfill its regulatory obligations by making available to OFCCP other documentation that it has conducted the [required] compensation analysis.”  The Directive identifies a number of ways this can be accomplished:

  1. “[A] contractor may make available a redacted version of its compensation analysis, provided that the non-redacted portions include the required facts” discussed in the Directive.
  2. “[A] contractor may conduct a separate analysis during the relevant AAP period that does not implicate privilege concerns and provide that analysis to OFCCP in full.”
  3. “[A] contractor may generate a detailed affidavit that sets forth the required facts described [in the Directive] but does not contain privileged material.”

The Directive notes that where compensation evaluation documentation is demanded by the agency, the contractor must

“provide documentation that demonstrates at least the following:

i. when the compensation analysis was completed;

ii. the number of employees the compensation analysis included and the number and categories of employees the compensation analysis excluded;

iii. which forms of compensation were analyzed and, where applicable, how the different forms of compensation were separated or combined for analysis (e.g., base pay alone, base pay combined with bonuses, etc.);

iv. that compensation was analyzed by gender, race, and ethnicity; and

v. the method of analysis employed by the contractor (e.g., multiple regression analysis, decomposition regression analysis, meta-analytic tests of z-scores, compa-ratio regression analysis, rank-sums tests, career-stall analysis, average pay ratio, cohort analysis, etc.).”

Documentation of Action-Oriented Programs To Correct Pay Disparities.  The Directive also addresses the information a contractor must provide during an audit regarding pay disparities discovered during a compensation analysis.  Specifically, the Directive provides that where such disparities are discovered, OFCCP regulations “require the contractor to develop and execute action-oriented programs to correct them.”  As such, “OFCCP may request documentation demonstrating that the contractor did so.”  When it does,

“OFCCP will require documentation that demonstrates, at a minimum:

i. the nature and extent of any pay disparities found, including the categories of jobs for which disparities were found, the degree of the disparities, and the groups adversely affected;

ii. whether the contractor investigated the reasons for any pay disparities found;

iii. that the contractor has instituted action-oriented programs designed to correct any problem areas identified;

iv. the nature and scope of these programs, including the job(s) for which the programs apply and any changes (e.g., pay increases, amendments to compensation policies and procedures) the contractor made to the compensation system; and

v. how the contractor intends to measure the impact of these programs on employment opportunities and identified barriers.”

In her blog post published on August 18, 2022, Director Yang confirms that “[c]ombatting pay discrimination is a top priority for OFCCP” and notes that OFCCP “reviews contractors’ pay data and practices to identify problems that would not otherwise come to light because workers are often unaware of their colleagues’ pay.”

As such, contractors need to understand that notwithstanding the welcome “reaffirmations” contained in the Directive, OFCCP remains focused on pay discrimination issues and will devote significant attention to compensation matters during audits.  Contractors should familiarize themselves with the Directive, as revised, and ensure they are prepared to respond to OFCCP’s inquiries regarding their compensation analyses.

OFCCP Informs Contractors of Broad FOIA Request For EEO-1 Reports and Provides Opportunity to Object

OFCCP published a notice on August 19, 2022, notifying federal contractors of a request by the Center for Investigative Reporting made pursuant to the Freedom of Information Act (“FOIA”) requesting the disclosure of federal contractors’ EEO-1 Reports.  Specifically, the request seeks all Type 2 Consolidated Employer Information Reports, Standard Form 100 (EEO-1 Report), filed between 2016 and 2020 by federal contractors and first-tier subcontractors.  In the notice, OFCCP advises that it “has reason to believe that the information requested may be protected from disclosure under FOIA Exemption 4, which protects disclosure of confidential commercial information, but has not yet determined whether the requested information is protected from disclosure under that exemption.”  It instructs that any federal contractor who objects to the disclosure of the requested information submit a written objection by September 19, 2022.

Submitting Written Objections:

Any objections should be submitted through the OFCCP web form, available here, by the September 19, 2022 deadline.  Alternatively, written objections may be submitted by email to OFCCPSubmitterResponse@dol.gov or by mail to the contact information provided on the notice.

Specifically, objections must include the contractor’s name, address, and contact information, and at a minimum, should include detailed answers to the following questions:

  • (1) What specific information from the EEO-1 Report does the contractor consider to be a trade secret or commercial or financial information?
  • (2) What facts support the contractor’s belief that this information is commercial or financial in nature?
  • (3) Does the contractor customarily keep the requested information private or closely-held? What steps have been taken by the contractor to protect the confidentiality of the requested data, and to whom has it been disclosed?
  • (4) Does the contractor contend that the government provided an express or implied assurance of confidentiality? If no, were there express or implied indications at the time the information was submitted that the government would publicly disclose the information?
  • (5) How would disclosure of this information harm an interest of the contractor protected by Exemption 4 (such as by causing foreseeable harm to the contractor’s economic or business interests)?

Next Steps:

Upon receipt of a timely written objection, OFCCP “will give careful consideration to the objection prior to making a decision whether the requested information should be disclosed or withheld under FOIA Exemption 4.”  If disclosure is determined to be appropriate despite the objection, the submitter will receive “written notice of the reason for the decision, and a specified disclosure date that is a reasonable time subsequent to the notice.”

If a covered contractor does not submit a timely written objection, OFCCP will assume there are no objections to the disclosure of the information.

Answers to certain Frequently Asked Questions are available on the Submitter Notice Response Portal’s FAQ Page.  Further questions should be directed to the OFCCP Helpdesk Number at (855) 680-0971.

Attention Contractors: The AAP Certification Deadline is Almost Here

As previously reported, the OFCCP has established a Contractor Portal where federal government contractors can register and certify they have developed and maintained affirmative action programs at each of their establishments or functional units.  Those who do not register and certify are more likely to be selected for audit.

The deadline to register and submit AAP certifications is June 30, 2022.  Contractors that have not registered or certify should take steps to ensure they are in a position to certify by the deadline, or face the increased likelihood of an audit.  As our clients have experienced, the registration process can be difficult and time-consuming, so waiting until the last minute may jeopardize meeting the deadline.

OFCCP Announces Option to Bulk Upload for Large Federal Contractors

As previously reported, OFCCP recently launched its Contractor Portal, which requires certain federal government contractors to register and certify their compliance with the requirement to develop and maintain Affirmative Action Programs (“AAPs”). OFCCP has now introduced a “Bulk Upload/Modification” option on the Portal for federal contractors with 100 or more establishments or functional/business units.

The Bulk Upload/Modification Template allows a Parent Company to request to have establishments or functional/business units uploaded/modified collectively. A Parent Company must first register on the Portal and then complete the Bulk Upload/Modification Template.

Detailed instructions for using the Bulk Upload/Modification Template are available here and Frequently Answered Questions are also posted on the OFCCP website.

As a reminder, federal contractors are required to certify the status of their AAPs by June 30, 2022.

OFCCP Announces Companies Selected for Audits – Was Your Company Selected?

On May 20, 2022, OFCCP announced it posted its first Corporate Scheduling Announcement List (CSAL) of FY22. The list consists of 400 locations selected for a Compliance Review (Establishment Review), Corporate Management Compliance Evaluation, or Functional Affirmative Action Program Review.

Note that the list merely notifies these contractors that they will be audited – audits will not commence until the contractor receives a Scheduling Letter.  However, as we recently shared, OFCCP has changed its policies so that Scheduling Letters may be issued immediately (as opposed to the prior policy of not issuing Scheduling Letters earlier than 45 days from the publishing of the CSAL).  So, contractors on the list need to understand they are now “on the clock.”

To see if your company was selected, you can access the list here.  Those selected should consult with counsel as necessary to be sure you are ready for when OFCCP knocks on your door (which could come at any time).

Upcoming Webinar: What Do OFCCP’s Recent Directives and Rulemakings Mean For Contractors?

Readers of this blog are well-aware that the OFCCP has signaled a new aggressive shift in its enforcement efforts through new Directives and regulatory initiatives.

On Wednesday, May 18, 2022, we will host a CLE webinar reviewing these recent significant developments, what they mean for federal contractors and what federal contractors can expect from OFCCP moving forward.  Among other topics, Partner Guy Brenner and labor economist Dr. Rick Holt, a Partner at Resolution Economics, will examine the legal and practical implications of:

  • Directive 2022-02, which significantly modifies OFCCP audit procedures
  • Directive 2022-01, which addresses OFCCP’s access to contractors’ privileged pay equity materials
  • Proposed regulatory amendments to loosen standards for OFCCP’s discrimination findings
  • The Contractor Portal and AAP Certification Requirement

Click here to register.

OFCCP Releases 2022 VEVRAA Hiring Benchmark

The Office of Federal Contract Compliance Programs (“OFCCP”) has released its 2022 Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) benchmark.  Effective March 31, 2022, the new benchmark is 5.5%, a slight decrease from 2021’s 5.6% benchmark.  This is OFCCP’s seventh reduction of the benchmark, which has steadily declined since its inception in 2014.

The VEVRAA Benchmark is the figure which federal contractors must use to assess the effectiveness of their outreach programs for the hiring of veterans.  Contractors may either use OFCCP’s national benchmark, or establish their own benchmark using applicable statistics and other metrics set forth in OFCCP’s regulations (41 CFR § 60-300.45(b)(2)).

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