Earlier this month, OFCCP presented its Fiscal Year (FY) 2020 Congressional Budget Justification (CBJ) to Congress. (The federal government’s 2020 fiscal year begins on October 1, 2019). A CBJ is an opportunity for a federal agency to outline its priorities and accomplishments in order to justify the level of funding being requested.

In the last few years, many of the priorities outlined by OFCCP respond to the Government Accountability Office’s 2016 evaluation of the agency. That report outlined a series of recommendations focused on strengthening the effectiveness of the compliance review process, increasing compliance assistance for the contractor community, developing a uniform training program for OFCCP staff, and updating its guidance documents to provide additional clarity on how to achieve compliance. In response, OFCCP Director Craig Leen directed the agency to incorporate four key principles into its day-to-day operations:

• Certainty
• Efficiency
• Recognition
• Transparency

Those principles are key to understanding the initiatives described in the agency’s CBJ. Based upon our review of the CBJ, we’ve outlined below what we believe to be the key impacts for federal contractors and subcontractors over the coming months.

OFCCP Requests Increase in Budget

In its CBJs for FY 2018 and FY 2019, the agency requested appropriations and headcounts of $88 million and authorization for 440 full time equivalents (FTEs), and $91 million and authorization for 450 FTEs, respectively. While the agency was ultimately given approximately $105 million and authorized for up to 500 FTEs in each of those two fiscal years, the requests for a reduced budget and headcount appeared to indicate the agency expected to be in downsizing mode.

In FY 2020, the agency has requested appropriations of $103.6 million and authorization for up to 500 FTEs. The request includes $2 million dollars for upgrades to the agency’s electronic case management system, a cost that will supposedly be offset by operational efficiencies the agency indicates it has achieved, or will achieve, in FY2019.

In light of the agency’s increased budget request, federal contractors and subcontractors should not expect OFCCP to back off from conducting compliance reviews or implementing new initiatives due to a lack of resources.

OFCCP Intends to Broaden Its Reach

For FY 2020, the agency has indicated ways it intends to combat the issue of what Director Leen calls “free riders.” “Free riders” are those federal contractors and subcontractors that do not comply with the agency’s regulations, and therefore do not incur the burdens of compliance. In Leen’s view, these organizations effectively gain a competitive advantage over those organizations that do make efforts to be compliant. OFCCP has initiatives that have been implemented, or that will be implemented, that are meant resolve the “free rider” problem. These initiatives include the following:

• Affirmative Action Program Verification: OFCCP indicates in the CBJ that it will find ways to check whether organizations that have indicated they are in compliance in the federal government’s System for Awards Management (SAM) database are in fact preparing affirmative action plans and otherwise complying with the federal affirmative action laws.
• Conducting Compliance Checks, Focused Reviews: OFCCP intends to begin conducting narrowly tailored compliance reviews during 2019. It will conduct compliance checks that quickly review compliance with all three of the federal affirmative action laws, and focused reviews that will examine compliance with only one of the federal affirmative action authorities. OFCCP suggests that these abbreviated reviews will allow the agency to reach more contractors without placing additional burdens on the agency or the contractor community.
• Increasing Overall Number of Compliance Reviews: The CBJ states that in FY 2018, OFCCP completed only 812 compliance reviews. While these reviews resulted in significant monetary remedies for applicants and employees who were allegedly subject to various forms of discrimination, the number of reviews represented a 29% decrease from FY 2017. The CBJ indicates that OFCCP expects to “maximize resource utilization” in scheduling compliance reviews during FY 2020, which would lead to an increased number of compliance reviews.

Construction Reviews Will Center on “Mega Construction Projects”

The CBJ indicates that OFCCP reviews of construction contractors and subcontractors will continue to center on “mega construction projects.” “Mega construction projects” are valued at $25 million or more and last more than one year. The agency expects approximately 85% of its construction reviews during FY 2020 will be associated with mega construction projects. OFCCP intends to develop a form of compliance check that will be used to expedite certain construction reviews and allow the agency to reach a broader number of construction contractors and subcontractors.

Review of Pay Ain’t Goin’ Away

OFCCP continues to be intensely focused on finding and eliminating systemic pay discrimination. In its CBJ, OFCCP states that it expects 40% of all conciliation agreements used to remedy discrimination will involve systemic pay discrimination. In its CBJ for FY 2019, OFCCP has established a goal of 35%, and the agency expects to exceed that goal. (Please note that this 40% goal applies to reviews that end with a finding of discrimination. The huge majority of compliance reviews close without a finding of discrimination.)

In FY 2020, the agency has indicated it will give additional scrutiny to the following practices:

• Pay-related employment practices such as job steering which have an impact on employees of a particular sex and/or race
• Systemic compensation discrimination associated with job promotions

Note: while steering investigations have become more prevalent over the last few years, the agency has traditionally not focused on discrimination involving promotion.

OFCCP Will Continue to Seek Partnerships, Collaboration with Contractor Community

While OFCCP is committed to ensuring federal contractors and subcontractors are in compliance, the agency is also seeking to engage with the federal contractor community. The CBJ discusses various avenues for collaboration during FY 2020:

• Expanding Stakeholder Engagement Efforts: the CBJ states the agency will provide more Town Halls in order to seek input on issues facing various industries and communities.
• Recognizing High-Performing Contractors: the agency, in partnership with other agencies within the Department of Labor, will issue awards recognizing contractors who are excelling in providing opportunities for women and individuals with disabilities.
• Voluntary Corporate-Wide Audits: the agency is working on implementing a Voluntary Compliance Assistance Program (VCAP) in FY 2020. The VCAP will allow employers “…to undergo a voluntary corporate-wide evaluation procedure. Upon successful completion of the evaluation and other program requirements, OFCCP will exempt the corporation from scheduling for compliance evaluations for a fixed term.”
• Compliance Assistance, Education, and Training: the agency expects to offer additional training and education opportunities to employers during FY 2020. The CBJ states that federal contractors and subcontractors that complete the training and pass a final assessment will be granted a temporary exemption from new compliance reviews.

These are drastic changes to the agency’s operations and will warrant close attention over the coming months.