Have you ever wondered how the Office of Federal Contract Compliance Programs (OFCCP) determines which contractors will receive a scheduling letter? There are two parts to the process: 1) developing the list and 2) selecting contractors from the list. This article outlines the standard process for scheduling contractors, the additional situations that could subject a federal contractor to a compliance review, and the exceptions to the established scheduling procedures.

How is the list developed?

The OFCCP National Office uses multiple information sources to establish an overall list of federal contractors, which is called the Federal Contractor Selection System (FCSS). Sources include:

  • federal acquisition and procurement databases;
  • EEO-1 employer information reports;
  • Dun & Bradstreet (D&B) data;
  • census data; and
  • statistical thresholds, such as industry type.

Once the list is developed, a number of federal contractors are removed from the list. For example, companies with a Functional Affirmative Action Plan (FAAP) are excluded, as they are subject to a separate selection process. Contractors currently under review by OFCCP, were reviewed in the previous 24 months, or subject to current conciliation agreements or consent decrees are likewise removed from the list. Finally, contractors waiting to be scheduled, but not yet scheduled from the prior list, are excluded.

A list for each district office is then developed and sent out. The district office may use its discretion to sort the list using any one of a number of neutral factors including, but not limited to:

  • alphabetical order;
  • employee count at the establishment;
  • contract value; or
  • contract expiration date.

On the resulting list, the first and every 25th establishment are marked for a quality review per the Active Case Enforcement Directive. These are the federal contractors that receive a scheduling letter.

How else might a federal contractor be subject to review?

There are other situations in which a federal contractor could be subject to a compliance review. As noted earlier, federal contractors with FAAPs are scheduled from a separate list. A contractor might also be scheduled for Pre-Award Compliance Evaluations, pending an award of a federal supply and service contract of $10 million or more.

A federal contractor may also be subject to a Directed Review, which occurs when OFCCP receives credible information of an alleged violation of a law or regulations the agency enforces. This includes employment discrimination allegations deriving from individual or class complaints filed with the EEOC, or state or local fair employment practice agencies (FEPAs).

The final type of compliance review is a Conciliation Agreement and/or Consent Decree Follow-Up Evaluation. This is a review that would be scheduled during the monitoring period of an executed conciliation agreement or consent decree. Information received in a scheduled progress report could give rise to such a review, or when OFCCP otherwise needs to determine compliance with the terms of the agreement or decree.

Are there any limits to the number of audits to which a federal contractor may be subjected?

There is no legal requirement that limits the number of establishments per contractor that OFCCP may schedule for compliance evaluation, so OFCCP has full discretion in this matter. For example, in FY 2014, OFCCP limited the number of compliance evaluations to a total of no more than 35 for each corporate parent. Also, each district office was assigned no more than one Corporate Management Compliance Evaluation (CMCE) and one College/University evaluation.

The primary restriction on federal contractor compliance evaluations is called the “two year pass.” This prohibits OFCCP from starting a new review for a location within two years of the date of the closure letter of a previous compliance evaluation, or the end of reporting obligations pursuant to a Conciliation Agreement or Consent Decree – whichever is later.

There are two exceptions to the “two year pass.” First, if OFCCP believes that the federal contractor is not complying with the Conciliation Agreement or Consent Decree, they may reopen the review. A second exception is when OFCCP receives an individual or class complaint, or when OFCCP determines there is credible information regarding an alleged violation of a law or regulation enforced by OFCCP.

From time to time, OFCCP will issue a scheduling letter to a federal contractor within the two-year period after the close of the review. When this happens, OFCCP is usually willing to rescind the letter, unless one of the exceptions noted above is the reason for the initiation of the compliance review.

Final Notes

Keep in mind that being subject to a compliance evaluation is just one of the costs of doing business with the federal government. When you receive the scheduling letter, be sure to inform your highest level executive. Also inform the mail room that any incoming correspondence from the Department of Labor should be directed to a single identified point of contact. The deadlines listed in the scheduling letter are tight and fairly inflexible.

Finally, don’t be afraid to ask for assistance. Consult with in-house counsel and determine whether hiring outside counsel would be advisable. Your local counsel should also be able to help you identify the personnel who need to be advised of the audit.

Please note: Nothing in this article is intended as legal advice or as a substitute for any professional advice about your organization's particular circumstances. All original materials copyright © Schuyler Affirmative Action Practice 2017