Federal Contractors, Heads Up! New Audits, New Burdens, Less Time to Comply

On August 25, 2023, the U.S. Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFCCP) issued an Office of Management and Budget (OMB)-approved, revised Supply and Service Scheduling Letter and Itemized Listing, which is effective through August 31, 2026. OFCCP also issued a new round of Corporate Scheduling Announcement Letters (CSALs) for 1,000 federal contractors two weeks later on September 8, 2023.

Contractors undergoing compliance reviews after August 24, 2023, will be required to comply with expanded initial data and document requests contained in the revised Scheduling Letter. Those contractors on the September 8, 2023, CSAL—as well as those on prior CSALs that have not yet been scheduled for compliance reviews—may want to ensure that they can produce the information requested by OFCCP.

Quick Hits

• On August 25, 2023, OFCCP released its revised Scheduling Letter, which includes expanded initial data and document requests.
• Federal contractors must provide the requested information and data within thirty days of receiving OFCCP’s Scheduling Letter.
• OFCCP also recently released a new round of CSALs for 1,000 federal contractors.

CSAL List

OFCCP’s CSALs are courtesy notifications to contractors that OFCCP has selected for compliance evaluation. OFCCP’s methodology document for the September 8 CSAL reveals that:

• The list includes financial institutions, universities and colleges, federal contractors engaged in industries with the lowest weekly wages (per Bureau of Labor Statistics data), and non-construction contractors in industries that received the highest number of contracts through the Bipartisan Infrastructure Law. As usual, North American Industry Classification System (NAICS) sectors, such as Manufacturing and Professional, Scientific, and Technical, make up large portions of the CSAL.
• The CSAL does not include supply and service contractors with federal contracts valued at less than $50,000; those with federal, state, local, municipal, tribal, city, and foreign governments; exempted healthcare contracts under OFCCP’s Scheduling Moratorium, and contracts expiring on or before December 31, 2023.
• For the first time, financial institutions were selected from the online data tools of the Federal Deposit Insurance Corporation (FDIC), presumably because OFCCP believes that FDIC insurance creates jurisdiction over these entities.
• Contractors currently undergoing a compliance evaluation, those in a monitoring period following a conciliation agreement, those within a twenty-four-month exemption period following an earlier compliance review, those that are pending review based on an earlier CSAL, and those with a separate facilities waiver were removed from the new CSAL.

Notably, the CSAL does not start the compliance review process. Only contractors that receive a Scheduling Letter from OFCCP—if not otherwise exempt—must produce data and documents requested by the agency.

Scheduling Letter

The Scheduling Letter, which is used to initiate OFCCP compliance evaluations, contains an information request—called an “Itemized Listing”—for information and data that must be provided to OFCCP within thirty days of receiving a Scheduling Letter. Among the most significant changes:

• The actual letter initiating the compliance review now reflects OFCCP’s historical preference that all information be submitted electronically or through a secure file-sharing system. Curiously, the Scheduling Letter reflects OFCCP’s ability to continue delivering notice to contractors utilizing certified “snail” mail as well as email. We anticipate that the delivery method that arrives first will start the compliance review clock ticking.
• Post-secondary institutions and contractors with “campus-like setting[s] that maintain[] multiple AAPs [affirmative action programs] … must submit the information … for all AAPs” located in the city and state undergoing review. (Emphasis added.)
• For contractors struggling to respond to the new information requests in a timely manner, OFCCP sharpens its tone on noncompliance, as reflected in its internal Directive 2022-02 discouraging extension requests except in extraordinary circumstances: “You should be aware that OFCCP may initiate enforcement proceedings if you fail to submit the AAPs and Itemized Listing information within 30 calendar days of your receipt of the letter,” the Scheduling Letter states, adding that OFCCP “may also share that information with other enforcement agencies within the U.S. Department of Labor, as well as with other Federal civil rights enforcement agencies with which [OFCCP] ha[s] information sharing agreements,” such as the U.S. Equal Employment Opportunity Commission and the U.S. Department of Justice.
• Item 7 (action-oriented programs): Contractors must provide “documentation” covering “action-oriented programs addressing problem[] areas identified for the immediately preceding AAP year.” This will increase the costs and time needed to respond to the Scheduling Letter, especially for contractors that have not routinely collected and maintained this information as part of the annual AAP process.
• Items 8 and 12 (outreach and recruitment efforts): Contractors now have to provide within thirty days “[d]ocumentation of appropriate outreach and positive recruitment activities reasonably designed to effectively recruit qualified individuals with disabilities” and “qualified protected veterans.” OFCCP would like to receive detailed information, such as records certifying event attendance, invoices, and running logs of robust outreach/recruitment activity.
• Item 11 (disability utilization analysis): Contractors must, if any underutilization of individuals with disabilities is identified, now “provide a description of the steps taken to determine whether and where impediments for equal employment opportunity [EEO] exist.” This new requirement signals OFCCP’s increased attention to evaluating contractor efforts in reducing disability underutilization.
• Item 16 (EEO-1s and IPEDs): For the first time, OFCCP requests from post-secondary institutions their Integrated Postsecondary Education Data System (IPEDS) Human Resources Survey Component data collection reports for the last three years.
• Item 19 (compensation data): Contractors must now electronically produce detailed compensation data for all employees (including part-time, contract, and temporary employees, but not for staffing agency employees) for two snapshot dates: the date of the organizational profile contained in the current year AAP, and the date of the prior year AAP’s organizational profile. A contractor must also provide the “relevant data on the factors used to determine employee compensation” and then support and explain those factors with “documentation and policies related to the contractor’s compensation practices.” This requirement may be challenging for contractors that cannot articulate (and demonstrate) the factors influencing pay within their compensation architectures.
• Item 21 (artificial intelligence): OFCCP now requests identification and documentation related to employment recruiting, screening, and hiring, “including the use of artificial intelligence, algorithms, automated systems or other technology-based selection procedures.” Uncertain at this time is how OFCCP intends to evaluate this information.
• Item 22 (evaluation of compensation systems): Drawing on its internal Directive 2022-01 Revision 1, Advancing Pay Equity Through Compensation Analysis, OFCCP requests specific and detailed information showing that a contractor has satisfied its obligation to “evaluate its ‘compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities.’”
• Item 24 (policies and documents): In this new request, contractors must provide copies of EEO policies and documents, including anti-harassment policies, EEO complaint procedures, and even employment agreements impacting EEO, such as arbitration agreements.
• Item 25 (assessment of personnel policies): In this request, OFCCP adds teeth to its long-standing request for contractors’ most recent assessments of their personnel processes, identifying the detailed information to be provided to the agency regarding any impediments to equal employment opportunity.

What’s Next?

The new Scheduling Letter enhances and expedites the information production obligations required of contractors selected for compliance reviews after August 24, 2023, including the 1,000 contractors on the September 8 CSAL. Early coordination among internal and external resources, as well as careful review of OFCCP’s frequently asked questions (FAQs) guidance and compliance assistance information contained in OFCCP’s Contractor Compliance Institute, will provide contractors—especially those on the 2023 CSALs—the best opportunity to successfully comply with OFCCP’s expanded demands.

For more information on OFCCP’s revised Supply and Service Scheduling Letter and Itemized Listing, please join us for our upcoming webinar, “OFCCP’s New Audit List and Scheduling Letter Increase the Burdens on Federal Contractors,” which will take place on Tuesday, October 3, 2023, from 2:00 p.m. to 3:00 p.m. EDT. The speakers, Leigh M. Nason, James A. Patton, Jr., and Cameron W. Ellis, will unpack the latest CSAL list, provide an overview of the most challenging aspects of the revised Scheduling Letter, and identify strategic considerations and response options for contractors selected for compliance reviews. Register here.

Ogletree Deakins’ OFCCP Compliance, Government Contracting, and Reporting Practice Group will continue to monitor developments and will provide updates on the Government Contractors and OFCCP Compliance, Government Contracting, and Reporting blogs as additional information becomes available.

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