On August 24, 2018, the Office of Federal Contract Compliance Programs (OFCCP) announced three new directives in furtherance of its efforts to make the agency more transparent and efficient and to maximize the effectiveness of compliance assistance outreach. This article focuses on two of the three directives: an initiative establishing a recognition program for contractors with "high-quality and high-performing compliance programs and initiatives" and a program to verify that contractors are in compliance with federal affirmative action program (AAP) requirements.

Contractor Recognition Program – Directive 2018-06

The OFCCP is bringing back an award system for contractors and plans to develop a program "to recognize contractors with high-quality and high-performing compliance programs and initiatives." A previous award program was scrapped years ago, but the OFCCP now concludes that rewarding contractors for going above and beyond is worthwhile for the following reasons:
 

  • It would support "proactive compliance by contractors" regardless of whether they are being audited.
  • Contractors would be "encouraged" by recognition of premier non-discrimination practices.
  • The contracting community "could benefit from research or case studies on best or model compliance practices."
  • The OFCCP's compliance assistance that is premised on other businesses' practices is more likely to be supported by contractors.

The OFCCP does not provide any details about the recognition program, but states that the agency plans "to highlight specific contractor programs and initiatives that are innovative, have achieved demonstrable results, and that could be taught or incorporated into contractor peer mentoring programs." The OFCCP notes that recognizing mere compliance is not its objective; rather, the award "would be for contractors who are innovative thought leaders among their peers for achieving diverse and inclusive workplaces."

Although the OFCCP provides no timetable for rolling out this recognition program, we should expect specifics soon, as the government fiscal year draws to a close. Any award from an enforcement agency is well-earned and highly valued, so contractors should get ready to brag about their state-of-the-art practices for advancing diversity and inclusion.

Affirmative Action Program Verification Initiative – Directive 2018-07

In an effort to combat what it views as lackluster compliance by contractors, the OFCCP will soon require all covered contractors and subcontractors to verify their compliance on an annual basis. Although this is not an entirely new premise, the effect on contractors may be significant.

During roughly 2001 through 2006, the EO Survey required contractors to certify that they had an affirmative action plan in place, putting pressure on contractors to ensure that their AAPs were in effect when the EO Survey was submitted. In addition, the federal System for Award Management requires contractors to certify annually that they have developed and have "on file" an affirmative action plan compliant with Executive Order 11246, or that they have not previously had covered contracts, though it is not clear whether there is any mechanism in place to monitor responses. Finally, the OFCCP's regulations also contain a provision authorizing the OFCCP to require contractors to submit summary information to the agency annually. The OFCCP has not previously taken advantage of this regulatory authority.

The OFCCP surmises that many federal contractors do not adhere to the regulations requiring written AAPs. The Agency's conclusion is based on the fact that 85 percent of contractors fail to submit timely AAPs after receiving a Scheduling Letter. In addition, the OFCCP acknowledges that it is unable to audit more than a very small portion of contractors each year.

bq lquo It also will "help ensure there are no 'free-riders' that benefit from participating in the federal procurement process… bq rquo

The OFCCP has not provided specifics about the new certification requirement, but notes that the "verification would initially take the form of OFCCP review of a certification, followed by potential compliance checks, and could later take the form of annual submissions of AAPs to OFCCP for review." The Agency has also indicated that it intends to incorporate the verification (or lack thereof) into its methodology for scheduling contractors for compliance evaluations. In other words, contractors who do not certify are more likely to be selected for a compliance evaluation. This increases the OFCCP's chances of finding deficiencies in the audits that it does conduct. It also will "help ensure there are no 'free-riders' that benefit from participating in the federal procurement process while not bearing the corresponding cost of AAP compliance based on the current likelihood that they will not be listed (and potentially receiving an inequitable advantage over law abiding contractors)."

The Directive provides that the OFCCP will develop a comprehensive program that includes the following:
 

  • Annual certification of compliance with AAP requirements
  • Use of certification as criteria in scheduling methodology of compliance evaluations
  • Compliance checks conducted by the OFCCP
  • A requirement that contractors provide a "proffer of the AAP" if they ask for an extension of time to submit the AAP during a compliance evaluation
  • Systems to collect and review AAPs provided by federal contractors

While the OFCCP's faithful constituents wait for more information regarding the agency's new directives, contractors who may not be fully compliant should take advantage of this lead time to review policies, practices, and procedures, and to develop (and implement) compliant written AAPs.