OFCCP Compliance Reviews for Government Contractors: Do You Know What to Expect?

Rebecca Tipton, SHRM-SCP

BMSS HR Advisory
Putting the “Resource” in Human Resource Consulting

With the OFCCP’s recent release of its 2023 Corporate Scheduling Announcement List (CSAL), many government contractors may be feeling anxiety knowing they may receive that fateful letter while not knowing what to expect or whether they are ready. Even those experiencing relief at not being included this year know that it is only a matter of time. Therefore, it is important to know what to expect so that your company can be as “audit-ready” as possible when the time comes.

The most common type of review included on the CSAL is the “Establishment Review” which is often more commonly referred to as the Compliance Review. The Compliance Review can have up to four different stages, which are the Scheduling Letter and Itemized Listing, a Desk Audit, an Onsite Review, and Final Determination.

Scheduling Letter

The Scheduling Letter is the official notice that your company has been selected for the Compliance Review. While you may have been notified through the CSAL, this is more of a courtesy from the OFCCP to give companies a heads-up so that they can actively expect their letter to arrive and be able to respond in a timely manner. Responding promptly is exceptionally important as you will have only 30 days to respond with the information requested within the letter and the included itemized listing. If you fail to meet the 30-day deadline, you can be considered to be out of compliance. While the OFCCP does allow for deadline extension requests, they have a narrowly defined list of allowable excuses.

Assuming that you do not qualify for an extension, you should be prepared to provide everything included on that list, which will be a copy of your AAPs for EO 11246, Section 503 of the Rehabilitation Act, and VEVRAA as well as the support data, such as your EEO-1 reports for the past three years, copies of any Collective Bargaining Agreements and any relevant policies or handbooks; reasonable accommodation logs and policies; logs for applicants, hires, promotions, and terminations;  compensation data including the hours worked per week, base salary or wages, bonuses, any factors that reflect pay disparities (such as education, experience, or location), and any relevant policies affecting how compensation is determined. The itemized listing will go into more detail, but most items listed are required components of your AAP and should already be included. It should be noted that there is a current proposed rule change for the scheduling letter request. However, as of the date of this article, such changes have not yet taken place.

Desk Audit

After submitting the documentation requested in the scheduling letter, the assigned OFCCP Compliance Officer will start the Desk Audit, which is an offsite review of the submitted materials. This phase is specifically intended to determine whether the contractor is meeting the requirements applicable to EO 11246, Section 503 of the Rehabilitation Act, and VEVRAA. Ideally, the Compliance Officer will be able to review your submitted documents and determine that your company is in compliance. However, if there are missing items, violations, or the Compliance Officer cannot fully confirm your company is in compliance, they may progress to the Onsite Review for further inspection.

Onsite Review

The Onsite Review is arguably the phase that every contractor tries to avoid as it requires a bit more disruption to typical operations. If elected for this stage, the Compliance Officer should contact you to schedule the visit. During this stage, you can expect the Compliance Officer to complete a physical inspection of the premises, identify whether you are following AAP and other government contractor posting requirements or take a deeper look into your processes and procedures.

Additionally, the officer will interview staff and meet with top leadership, at which point they will try to determine how effective and practiced your policies are, such as finding out how well your reasonable accommodation process and other AAP procedures are communicated to all levels of the organization. This is why it is so important to provide education on equal opportunity policies and procedures to both employees and management. At the end of the Onsite Review, you can expect an exit conference with the Compliance Officer.

Final Determination

Following the Onsite Review, the Compliance Officer will reach one of two conclusions, the company is either in compliance or it is not. Following a determination of compliance, the company will receive an audit closure letter formalizing that the review has been completed satisfactorily. However, if the determination is that your company is out of compliance, then you will likely receive a Pre-Determination Notice that identifies problem areas and provides a final chance to legitimately explain the disparities identified. If a legitimate explanation cannot be provided, or is not accepted as legitimate, then you can expect to receive either a Conciliation Agreement, with a plan for continued monitoring and correction, or a recommendation for enforcement, which can result in compensation corrections to those affected, injunctions, class action relief, and/or debarment.

The potential results may be grim, which is why it is so important to be and stay audit-ready so that, when facing an OFCCP audit, you know you have everything you need to show compliance. Of course, at times, it is helpful to have an extra set of eyes to help you stay vigilant. So, if you need any help with conducting your self-audit or compensation analysis, preparing your AAPs, or even just consultation on your existing processes, reach out to the BMSS HR Advisory Services team at (256) 964-9788 or rtipton@bmss.com.