OFCCP Seeks Unprecedented 33% Budget Increase: Focus is on Rebuilding OFCCP; Not Audit Enforcement

President Biden on Friday released his request to the Congress for a budget for the Executive Branch of the federal government for Fiscal Year 2022 (beginning October 1, 2021). All major federal agencies and sub-agencies also published their “Congressional Budget Justification” reports, including OFCCP which filed a 29-page Budget Justification. The agency Budget Justifications compare their budget requests and budgets enacted in the prior two years with the at-issue proposed Budget Request.

Highlights of the Budget OFCCP seeks include:

1. An increase of its FY 2021 Budget from the $105,976,000 (~$106 million) to $140,732,000 (~$141 million) (+$34,756,000 (~$35 million) = ~a 33% requested increase)
2. $32,566,000 of that $34,756,000 increase (~94%) OFCCP proposes to use to hire an additional 188 employees (at an average cost of $173,000 per hire: $32,566,000 divided by 188)
   • These 188 hoped-for additions to employee headcount would increase OFCCP’s on-roll headcount from its current 451 personnel to 639 (451+188)
3. A budget appropriation history at page 11 of the Justification which reports data showing that OFCCP’s budget has held relatively steady under both Democrat and Republican Administrations over the past decade, hovering between a little over $105 Million in FY 2012 to a one-year low in recent history of a little under $100 Million (in FY 2013) to almost $106 Million in each of the last two years with an average of just over $104 Million in each of the last 10 years going back to the third year of the Obama Administration.

   In that same 10-year time-span, however, OFCCP’s employee headcount has dropped steadily each and every year (down 304 employees), and at even a greater rate during the Obama Administration (199 employees in the five reporting years of the Obama Administration which OFCCP’s Budget Justification reports = 39.8 employees on average per year OFCCP headcount decrease (199 divided by 5)) than during the Trump Administration (105 employees in four years = only 26.25 employees on average per year headcount decrease (105 divided by 4)). However, adding in all years of the Obama Administration (including the three prior years not reported in the OFCCP’s FY 2022 Budget Justification), the Obama Administration erosion over eight years was only an average of 33 employees per year (232 employees divided by 7). Collectively, over the last 12 budget cycles (since 2010), OFCCP has lost 337 employees (232 during the Obama years and 105 during the one term of the Trump Administration) for a total annual average loss of ~30.6 employees per year (337 divided by 11).

   It is also very important to note that the Obama Administration started with an OFCCP headcount of only 585 from the hand-off from the Bush Administration. However, the Obama Administration OFCCP received a substantial budget increase in FY 2010 (+23%) following the large mandate President Obama earned at the polls in 2008. This one-time (largest ever-to-date) budget increase allowed OFCCP, for the first time, to crack the $100 Million budget ceiling. More importantly, it catapulted OFCCP headcount, for a brief moment, by 203 employees to a total of 788 OFCCP employees for FY 2010. The next year, however, (FY 2011) OFCCP resumed its steady stairstep-down headcount decrease, year-by-year, through the first and second terms of the Obama Administration and again in each year of the four-year Trump Administration (which began in the second quarter of FY 2017). The annual OFCCP headcount erosion eventually wiped out, by the end of the Obama Administration in FY 2017, the entirety of the Obama FY 2010 employee build-up…and then some…and then headcount kept steadily decreasing during the Trump OFCCP for the 11th year in a row.Here is the last 10-year headcount erosion report as taken from OFCCP’s FY 2022 Congressional Budget Justification filed with the Congress on Friday:
   – 735 – in FY 2012, the third Obama Administration budget year, to
   – 729 (-6) – in FY 2013, to
   – 683 (-46) – in FY 2014, the first year of the second Obama Administration, to
   – 621 (-62), to
   – 615 (-6), to
   – 556 (-59) – in FY 2017, the last Obama Administration budget year), to
   – 514 (-42), to
   – 500 (-14) – in FY 2019, to
   – 472 (-28), to
   – 451 (-21) – in current FY 2021, the last Trump Administration budget year).So, while OFCCP’s budget was relatively steady over the last decade, its employee headcount has nonetheless decreased each and every year and has collectively plummeted an eye-popping 304 employees in the last 10 years (a ~40% loss of employee headcount in that window period (304 divided by 755)).

4. OFCCP seeks $1,630,000 in overtime pay and bonuses, up a proposed $306,000 from the prior year
5. An increase of $2,190,000 to raise the salaries and benefits of incumbent OFCCP employees
6. A decrease of only $12,000 in office rents (signaling the end of OFCCP office closures)
7. An increase of $728,000 in travel expenses (signaling a return to more onsite audits)
8. A decrease of almost $10 million in the purchase and maintenance of equipment
9. A report that there are currently approximately 25,000 covered federal contractors with 120,000 AAP establishments which employ approximately 20% of the American workforce.
   • Note: The Obama Administration in 2014 estimated that there were approximately 25,000 covered federal contractors operating through approximately 177,000 AAP establishments. (See page 12 of OFCCP’s Congressional Budget Justification for FY 2022)
10. A statement that a larger budget would allow OFCCP to conduct a “larger number of pre-award and compliance evaluations and pursue more enforcement actions.” (See page 13 of OFCCP’s Congressional Budget Justification for FY 2022). The reference to “pre-award reviews we assume was a “slip-of-the tongue” and does not foreshadow the return of “Pre-Award Reviews.” OFCCP has not conducted Pre-Award Reviews in over 40 years (since OFCCP realized in the Carter Administration that it could not debar covered federal Government contractors without a trial-type hearing, thus rendering useless the entire concept of an OFCCP audit to occur in the 30 days before the award (i.e., “pre-award”) of a federal contract).
11. Setting out five Strategic Initiatives for FY 2022 were OFCCP to receive the whopping budget increase it has requested:
    • Rebuilding Workforce (See discussion above regarding OFCCP’s hope to obtain an increase of over $32 Million to hire 188 new OFCCP staff. Also see page 16 of OFCCP’s Congressional Budget Justification for FY 2022);
    • Technology Modernization (See page 16 of OFCCP’s Congressional Budget Justification for FY 2022).
      • Completing OFCCP’s Compliance Management System (CMS) which OFCCP is building because it believes it enables “field staff to collaborate across the country, facilitates remote supervision, and permits the agency to more strategically deploy resources by tracking data and identifying patterns at a national level.”
      • Deploying the Notification Construction Award Portal (NCAP) “allowing federal procurement officers, States, and construction contractors and subcontractors to electronically notify OFCCP of construction awards valued at $10,000 or more.”
      • OFCCP specially notes that its IT modernization efforts further operate to centralize notification processes into the OFCCP National Office in Washington D.C. (and thus removing more decision-making and authority from District Offices in OFCCP’s continuing de-valuation of OFCCP field offices).
    • Reinvigorating Construction Enforcement (See page 16 of OFCCP’s Congressional Budget Justification for FY 2022).
      • OFCCP plans to “reinvigorate its compliance program for federal contractors and subcontractors and federally assisted construction contractors and subcontractors.”
      • Note 1: Please notice the two references to “subcontractors, which the last two Administrations have given up trying to audit since OFCCP does not have a comprehensive and reliable list of “subcontractors.” OFCCP supplies no explanation as to how it thinks it might go about locating construction subcontractors. The only way for OFCCP to obtain a very partial and skewed list of construction subcontractors would be to audit subs on so-called Mega Construction contracts (usually defined, depending on Administration, as valued at $25 or $50 Million, or more).
      • Note 2: OFCCP’s construction program has now been side-lined for almost 3 years since Baker Construction company brought OFCCP’s unconstitutional approach to selecting construction contractors to a federal court’s attention. The Court found OFCCP had violated Baker’s Fourth Amendment rights against unreasonable search and seizure. As a result, OFCCP stopped its construction audit program to rebuild a new system of audit selection it has just recently begun to deploy.
        • OFCCP also plans to “launch an outreach and education campaign to advance equity in construction contractor workplaces and to educate workers of their rights under the mandates enforced by OFCCP.” While ambiguous, this latter point sounds like a suggestion that OFCCP will “stir the pot” with minority and female applicant groups and encourage them to either demand rights from construction contractors and/or file Complaints with OFCCP to seek to access rights applicants will claim the contractor discriminatorily denied them.
    • Increasing Contractor Accountability (See page 17 of OFCCP’s Congressional Budget Justification for FY 2022).
      • OFCCP now makes clear that its so-called OFCCP Verification Program would “create a portal for contractors to self-certify that they have completed their Affirmative Action Programs (AAP).” OFCCP’s specific reference to a “certification” (only) should now stop contractor concern spawned by the rumors which leaked out of OFCCP in the Trump Administration that OFCCP might attempt to force contractors to send entire AAPs to OFCCP by the tens of thousands to prove the contactor had in fact created all of the AAPs which OFCCP’s Rules require covered federal Government contractors to develop.
      • OFCCP did not explain the need for this verification different from what OFCCP already otherwise requires of “…each bidder and prospective prime contractor and proposed subcontractor, where appropriate, to state in the bid or in writing at the outset of negotiations for the contract: (1) Whether it has developed and has on file at each establishment affirmative action programs pursuant to part 60-2…”. (See 41 CFR Section 60-1.7(b)(1))
        • OFCCP now also repeats the Trump Administration’s intention to use the certification data “to more effectively build a neutral scheduling process that will enable the agency to focus its limited resources on compliance evaluations of contractors where there are more likely to be indicators of systemic discrimination.” The OFCCP thus seems to assume that a contractor NOT developing an AAP for Minorities and/or Women is also more likely engaging in unlawful systemic discrimination. We are not aware, however, of any evidence that is true and OFCCP cites to none.
    • Racial Equity Initiative (See page 17 of OFCCP’s Congressional Budget Justification for FY 2022).”The purpose of this initiative is to identify promising practices, evidence-based research, and innovative initiatives that can lead to more diverse, equitable, and inclusive workplaces that increase racial equity in employment opportunities. In particular, this initiative will focus on examining employment practices that have been effective in closing racial pay gaps, increasing the recruitment and hiring of workers of color, particularly in fields where there has long been underrepresentation; and facilitating the promotion of workers of color into senior-level and executive positions.”
      • Apart from the potential constitutional limitations on such an Initiative focusing on race to the exclusion of color discrimination or discrimination law and Affirmative Action requirements as applied to religion, women or members of the LGBTQ community, individuals with disabilities and Protected Veterans, there is the political problem that OFCCP is elevating the level of resource allocation to only one of the Protected Groups OFCCP is charged to protect.
      • Moreover, there is also the concern that OFCCP has long been addressing this issue in Glass Ceiling audits since OFCCP Director Cari Dominguez inaugurated their use 30 years ago in 1991 (in the George H. W. Bush Administration: the father, #41).
12. OFCCP’s polite dissing of the Trump Administration’s use of Focused Reviews (which turned out to not have any “teeth” to them):“In FY 2021, OFCCP amended its FY 2020 Supply and Service Scheduling List by removing all Supply and Service establishments previously selected to receive focused reviews and compliance checks. OFCCP retained only full compliance reviews. This change allowed OFCCP to strategically allocate its limited resources on comprehensive compliance evaluations and identifying and remedying systemic discrimination. In taking this approach, OFCCP built on the successes and lessons learned from the Section 503 and VEVRAA Focused Review program, to strengthen the enforcement of its laws protecting people with disabilities and veterans during comprehensive compliance evaluations.” (emphasis added)For more detail, see Fox & Chambers DirectEmployers Week In Review Blog which went viral on this issue: The Queen’s Gambit: New OFCCP Director Jenny Yang Signals She is Going to Make Bold Moves at OFCCP as She Scrapped 1,750 Upcoming Audits and May Be Discontinuing the Focused Review Style of Audit
13. Leaving us amid an air of mystery, OFCCP reported that it is “considering further modifications” of the Rule it finalized in FY 2021 titled the “Non-Discrimination Obligations of Federal Contractors and Subcontractors: Procedures to Resolve Potential Employment Discrimination,” otherwise known as the OFCCP Predetermination (“PDN”) Rule. (See page 21 of OFCCP’s Congressional Budget Justification for FY 2022). Prior Trump Administration OFCCP Director Craig Leen thought this was one of the more important legacies he left at OFCCP. He once described it as “tying the hands of OFCCP” to provide due process-like procedures in OFCCP discrimination audits to cause the agency to put contractors clearly on notice of what OFCCP was accusing the contractor of having done, or failed to have done. OFCCP’s bald statement only that it is considering “further modifications” to OFCCP’s PDN Rule suggests not only a coming OFCCP Rulemaking, but also that the modification will likely be to dilute OFCCP’s obligation to be clear and transparent in the discrimination allegations OFCCP levels at contractors. The PDN Rule came about in response to the highly aggravated complaints of contractors that OFCCP so often left them in the dark in discrimination audits to guess at exactly what OFCCP’s claims were and what the supporting evidence was, if any, to support OFCCP’s claims and permit the contractor to know what, if anything, it had done or not done which violated one or more of the non-discrimination laws OFCCP prosecuted.
14. OFCCP WATCH: What OFCCP Did Not Say is Almost as Interesting as What It Did Say:
    • No word about the oral claims USDOL/OFCCP made at the beginning of the Obama Administration that OFCCP would immediately withdraw the Trump Administration Final Rule as to the First Amendment rights of covered federal contractors (the so-called “religious exemption” Rule more formally titled: “Implementing Legal Requirements Regarding the Equal Opportunity Clause’s Religious Exemption”)
    • No word about OFCCP’s prior thinking to use past OFCCP historical experience with companies it had audited to select future contractor establishments for audit.
    • No word whether and when OFCCP employees would return to work at their almost $5.5 Million (annually) worth of offices.
    • No word whether OFCCP will embark on a program to close all of its brick-and-mortar field offices and adopt “work from anywhere” policies as OFCCP adopted during the COVID-19 pandemic, and is continuing thus far.
    • No word on what OFCCP plans to do, and when, to finally close the still large number of Obama-era OFCCP audits, many still not being actively worked even in late FY 2021.
    • No word on whether/how OFCCP plans to return to its former level of productivity in OFCCP Compliance Evaluations and Complaint investigations. Audit volume per OFCCP Compliance Officer is still drastically reduced from the Bush Administration, even as adjusted for the reduced number of OFCCP personnel (OFCCP currently employs only 130 employees fewer than at the end of the most recent Bush Administration, but closes thousands of fewer OFCCP audits each Fiscal Year than in the Bush years, which itself was a large stepdown in the number of audits per Compliance Officer the Clinton Administration managers had achieved.)