OFCCP’s Congressional Budget Justification Is Chock-Full of Insights Into the Agency’s Future Plans & Past Performance

The following nine paragraphs highlight several key points of interest in OFCCP’s CBJ. Page numbers cited indicate the printed PDF (not digital) page numbers (to line up with the Table of Contents).

1. Two-year funding request (page 2)

OFCCP requested two-year funding “to increase flexibility for program execution,” as opposed to the usual and expected annual budgeting. “The annual uncertainty in the appropriations timing results in delayed hiring and rushed execution of contracts. The multi-year availability would reduce the impact of short-term continuing resolutions at no cost to the annual appropriations bill. This change would also enhance staff oversight of the programs they are administering,” the agency explained. OFCCP did not explain, however, why this asserted need would be any different for it than any other agency in the federal Government.

2. OFCCP’s current estimates of the federal contractor universe (page 10)

“OFCCP has jurisdiction over approximately 25,000 firms with 120,000 contractor establishments, which employ more than 20% of the American workforce,” the CBJ stated. (OFCCP has bounced this number of federal contractors around this year from 20,000 to the more traditional reports of 25,000). The agency expects the number of contractors to increase due to the Bipartisan Infrastructure Law (BIL), the Inflation Reduction Act, and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act.

3. Staffing report (pages 13 & 23)

“After reaching the agency’s lowest level of staffing in decades, OFCCP worked actively to hire and onboard over 100 new employees in FY 2022, including 68 field compliance officers, bringing the agency’s onboard staff total to 486 (427 FTEs),” the CBJ reported (page 13). In addition to “onboarding four new labor economists in FY 2022, the agency hired a number of field managers, outreach specialists, technical experts, and operational and administrative support staff in FY 2023, as well as recruited nine new data scientists” (page 23).

Editor’s Note: All OFCCP’s field hires were replacement hires, and not new hires. Like many private sector businesses, OFCCP needs a determined plan to review their turnover statistics and ensure employee retention in the coming year(s).

4. FY 2024 enforcement focus (page 11)

OFCCP will focus on the construction, manufacturing, and technology industries and on reaching workers from underrepresented communities. It will prioritize: (1) removing discriminatory hiring barriers; (2) adapting its enforcement strategy to the evolution of work, including strengthening its technological capacity and expertise; and (3) developing a robust collaboration with organizations serving both workers and contractors.

Editor’s Note: These three objectives have worn trite over the decades without results. This focus will unfortunately not impress budget decision-makers as these promises have become repetitive and hollow.

5. Agency technology and employer use of AI (pages 15-16)

“Employers increasingly use some form of automated tool as part of their hiring process, including those that rely on artificial intelligence (AI) or algorithms to screen and sort workers — raising significant equal opportunity considerations,” OFCCP observed. The requested budget increase will allow OFCCP “to grow its specialized expertise” and develop a “more advanced risk-based scheduling methodology.” It would also enable the agency to “invest in robust training for its compliance officers and managers.”

Editor’s Note: Everybody agrees that OFCCP employees at all levels need much more training. This has been true for years. But Congressional Budget Committee Members are not going to dole out training budgets for OFCCP until it first solves its employee retention problems. Why train employees who will be gone within 12 months is the question they routinely ask when training budgets are part of the agency’s ask?

“Investment in its data analytics capacity will also enable OFCCP to better analyze and evaluate the impact of its work, identify common problem areas, and provide employers with resources to prevent equal opportunity barriers,” the agency stated. “By utilizing broader sets of data and information to identify risk factors for noncompliance, the agency will focus its resources where problems are most likely to exist, such as repeat violators,” OFCCP wrote.

Editor’s Note: OFCCP has been promising this for two decades without any sense of accomplishment of its stated goal. Each succeeding OFCCP Director for the last three decades has tried new audit selection targeting systems without changing noticeably the percentage of agency-asserted unlawful discrimination claims. GAO issued a report in 2016 suggesting OFCCP create audit selection systems it could use to determine which federal Government contractors are most likely to be in violation of one or more of the three statutes. Seven years later, OFCCP is in the same place. Perhaps it is not possible to predict which employers will engage in unlawful employment discrimination? No one is that prescient about what Talent Acquisition personnel or compensation managers are going to do in the upcoming year. In addition, perhaps the notion of targeted audits is not as attractive as it sounds because it runs afoul of OFCCP’s fifty-year-long policy determination, driven by profoundly important legal considerations, that audits should not be targeted, but rather should be selected pursuant to a “neutral” administrative plan.

6. Modernized review of single establishments (page 16)

OFCCP “will build on its efforts to modernize its traditional review of single ‘establishments’ to align with the evolving reality of the workplace where employers no longer rely primarily on paper-based records in a physical establishment but store and analyze data electronically company-wide,” the agency explained. “This requires taking a more comprehensive approach to evaluating contractors’ employment practices and coordinating compliance reviews across multiple establishments,” it added.

Editor’s Note: OFCCP would have to change its Rules through Administrative Procedure Act procedures of formal Notice to the public and the receipt/review of public Comments to it followed by a Final Rule. Of course, for almost the last 60 years, dozens of Republican and Democrat OFCCP Directors have preferred to audit “by Affirmative Action Plan establishment” and not company-wide. The three primary policy drivers behind the rejection of what OFCCP is telling the Congress in its current CBR the agency is now considering are:

1. The slippery-slope problem: If OFCCP audits company-wide, the entirety of its resources could be consumed by one company…for years. Imagine, for example, if OFCCP were to audit Walmart with almost 6,000 store locations (including Sam’s Clubs), it would be tantamount to over six years of OFCCP audit enforcement activity…for just this one company. (Context: OFCCP audit numbers have hit new lows in the history of the agency and fell below 900 Supply & Service audits in FY 2022).

   Or, imagine a company-wide audit of Amazon with over 1.3M employees in the United States. (OFCCP audits of AAP establishments average about several hundred employees and have been dramatically decreasing in employee size in recent years). Moreover, as noted above as to the Walmart example, OFCCP audited fewer than 900 Supply and Service establishments in FY 2022. And, that was true despite being fully staffed and (as always) having promised substantially more audits in 2022 if the agency got the budget to increase its staffing—as it did). Do the math: it would take OFCCP over 5 years at its current audit pace to just complete a company-wide audit of Amazon (1,300,000 divided by about 250 employee AAP establishments divided by 1,000 audits (let’s say) per year, on average=over 5 years just to audit Amazon; and

2. The spreading the wealth problem: OFCCP audit policy has always been to spread its wings broadly and to try to cover every one of the over 200 major industries which exist in the U.S. OFCCP’s objective for over 60 years has been to make it so that no federal contractor can ever feel the comfort to rest thinking it has found a quiet and safe place to fall beneath OFCCP’s “radar” and relax its compliance efforts. Company-wide audits not only drive and direct OFCCP resources differently than intended (OFCCP follows the policy; not the local problem observed), but they are also “Black holes” which can swallow whole OFCCP Regions of effort, not just one OFCCP District Office; and
3. The fallacy of the assumed “Sherwin-Williams” approach to Human Resources policies dripping down from corporate headquarters to all local establishments. During the Clinton Administration, there came one year in which OFCCP Director Shirley Wilcher challenged her Regional Directors to each create an audit policy initiative. The Atlanta Region piloted a “company-wide” audit strategy to follow employer policies in use within the Atlanta Region but traced back to a corporate headquarters or regional office establishment which was not under audit. The initiative was not later pursued because of the numerous problems this experiment revealed.

   There were too many problems to catalogue here but the main ones were that oftentimes the policies were just fine as written, but implemented differently in local offices (such that a problem manifesting itself in Atlanta did not necessarily also appear in other local offices: in other words, local implementation repeatedly limited nationwide-reach of investigations: NOTE: most of corporate America heavily decentralized Human Resources implementation in the 1990s. Few headquarter or even regional headquarters are knowledgeable day-in and day-out about what occurs in local offices let alone drive decision-making in their local offices).

   A second major problem was that the majority of HR policies were local, and not nationally driven, or there were combinations of local and national policies operating: thus, there was no Sherwin-Williams (the paint company) “cover the world” reality as OFCCP imagined.

   A third problem was that company-wide audits hijacked audit resources in unpredictable ways dragging numerous agency personnel out of their otherwise assigned roles as workloads multiplied exponentially as OFCCP chased policies from one corporate location to the next.

   A fourth problem was logistical in that OFCCP often found it needed to conduct and coordinate out-of-Region on-site investigations of corporate or local establishment witnesses. If OFCCP Atlanta chased a policy of concern to its root source in Seattle, what does OFCCP Atlanta do? Get on a plane to Seattle? Attempt to hijack the San Francisco Region’s Seattle District Office resources throwing the Seattle Office off its business plan, even apart from the coordination effort all that entails? Etc., Etc., Etc.

7. Compliance Management System upgrades (page 17)

“The agency’s Compliance Management System (CMS) requires new modules and enhancements to automate the agency’s business processes that are not currently integrated to improve consistency in operations across regions and provide a single location where all case information is stored,” OFCCP reported. These enhancements include developing a CMS module to coordinate multiple compliance reviews of a single contractor to ensure consistency in compliance reviews and resolution of findings as well as to create a new workflow for contractor establishments that agree to early resolutions. “Other changes would help OFCCP staff more efficiently track contractor activity (class members, remedy, employee training, policy initiatives, etc.) during the monitoring period after the conciliation agreement has been signed; create an interface between CMS and the Contractor Portal to view data such as AAPs in CMS; and functionality to produce weekly, monthly, and quarterly reports to monitor OFCCP’s progress toward established goals,” the agency detailed.

Editor’s Note: First, this is a statement in disguise that the OFCCP National Office wants to eviscerate and take on the duties of OFCCP District Offices by monitoring audits from afar and managing those OFCCP District Office audits. But where is the plan to so radically redesign OFCCP’s historic operating structure?

Second, OFCCP annually makes the argument that it needs more and bigger and more robust computer systems to accomplish its work more effectively and more efficiently, despite increased budget allocations and falling productivity. The agency has cried “wolf” repeatedly and has not delivered on its promised efficiencies which the agency always claims will follow from more digitization of more agency tasks. Budget decision-makers, on both sides of the political aisle on Capitol Hill, have for over a decade now grown and adapted “ear protective equipment” to dampen this annual noise absent the delivery of the claimed efficiencies to follow.

8. Development of Global Contractor Database (page 17)

OFCCP also intends “to develop a Global Contractor database that compiles relevant and current contractor information from USAspending.gov, SAM.gov, EEO-1 filings, and OFCCP systems (CMS, Contractor Portal, Notification of Construction Contract Award Portal (NCAP)) and makes it available in one location.” It plans to use the compiled information “for both scheduling and enforcement and can make it available to other DOL agencies to promote efficiencies.” “The work on this effort started in FY 2023 but will conclude in FY 2024 pending availability of funds,” the agency noted.

Editor’s Note: OFCCP has made this same request/promise in earlier budget requests but the budget goes in but the integration systems do not come to be. Meanwhile the agency has been more productive while accessing each of these major data systems individually. Moreover, there are many on Capitol Hill and in the contractor community who question funding data systems (like the Contractor Portal certification system) that lacks Congressional authority and legal authority.

9. FY 2022 enforcement statistics (page 28): OFCCP audits are slowing down even more (read to the bottom of this entry).

OFCCP completed 899 compliance evaluations and 67 complaint investigations in FY 2022 resulting in 131 conciliation agreements settled, including 34 discrimination cases totaling $11.8 million in monetary recoveries for 9,890 victims of discrimination and 320 negotiated job opportunities, the agency reported. It recovered an additional $8.6 million in salary adjustments for 1,022 affected class members, bringing the total FY 2022 monetary recoveries to $20.4 million for 10,912 victims of discrimination. (emphasis added) Moreover, OFCCP stated that it “enhanced the construction contractor compliance evaluation process, moving from compliance checks to full compliance evaluations of federal construction contractors and federally-assisted construction contractors and subcontractors, performing desk audits prior to going onsite.”

Editor’s Note: OFCCP’s sudden tactic to add $8.6 Million in “salary adjustments” to its “monetary recoveries” is highly unusual as judged by historical OFCCP reporting monetary recovery standards and quite different than what OFCCP has recently reported and currently elsewhere reports.

Historical Reporting Format: When the George Walker Bush OFCCP (the son) attempted to adopt this method of counting “going forward salary adjustments” as “monetary relief” recoveries, it was quickly criticized and abandoned as speculative and misleading. It was speculative because recoveries going forward may not occur as employees quit, die, or are terminated and may not remain employed to recover the pay going forward.

This reporting practice was considered misleading for two reasons, because:

1. when one counts today a backpay collection for an alleged discriminatory wage payment in the past, there is no violation going forward as the bad pay practice has been remedied. In adopting this novel “forward anticipated” result reporting format in an attempt to enhance its monetary relief recovery numbers (as they fall precipitously), OFCCP has transducted a common sense “but for” argument (if OFCCP had not fixed the problem in 2022, there would still be a pay problem in 2023) for “legal cause and effect” which does not exist once the contractor has fixed the alleged pay problem in 2022. There is no violation in 2023 or 2024, etc. (By the way, the analogy of this common sense “but for” monetary relief claim as applied to failure-to-hire backpay recoveries would be for OFCCP to claim the value of the rejected Applicant’s pay going forward for the entire tenure of the rejected Applicant’s subsequent tenure at the company when hired pursuant to OFCCP’s Conciliation Agreement requiring offers of employment to rejected “class members.” Of course, OFCCP has never attempted that reporting format and does not attempt to do so even now, even though logic purity between the reporting of “failure-to-hire” and “compensation” monetary relief reporting would otherwise so dictate);
2. there is no logical or certain endpoint to the payments. Do you look forward one year? Two years? Three years? Tenure of the employee at the company? By the way, OFCCP appears to have not just counted forward, but here has apparently counted forward two years since its CBJ for FY 2024 budget, as noted above, reports a claim of an “additional $8.6 million in salary adjustments” for FY 2022 while the total underlying backpay for salary compensation discrimination in FY 2022 is only $5,885,818.18 for the eight compensation Conciliation Agreements OFCCP references and on which it bases its “compensation” “monetary relief” reporting.

Fun With Numbers: OFCCP’s FY 2022 report of $5,885,818.18 in compensation monetary relief is already $50,000 artificially high in that one of the eight compensation settlements OFCCP reports in FY 2022 is not a compensation case at all. Rather the Conciliation Agreement (“CA”) with LivaNova USA is for $50,000 in contractor expenses to conduct an in-house pay equity analysis set out in a CA with no backpay or alleged victims of unlawful compensation discrimination.  This is what is known in legal terms as a “cy pres” payment, not authorized in government prosecutions (and abandoned at OFCCP over 40 years ago (in the Carter OFCCP) pursuant to a Solicitor of Labor Opinion Letter instructing OFCCP to stand down on such settlements).

More Fun With Numbers: OFCCP apparently came upon its decision to report “future salary adjustments” as “monetary relief” only AFTER it closed its FY 2022 “monetary relief” reporting. See OFCCP’s current website report it has titled (for many years) “OFCCP By The Numbers” (see “Fiscal Year Data Tables”: “Monetary Relief Obtained”). OFCCP’s FY 2022 report for total “monetary relief” (including OFCCP’s 8 compensation resolutions) reports only “$11,763,447” in “monetary relief” and not the “$20.4 Million” in “monetary relief” OFCCP reports above in the quote extracted from its FY 2024 CBJ. OFCCP has apparently forgotten to apply its current monetary relief reporting for the CBJ by correcting and updating its earlier official report of total “monetary relief” recovered in FY 2022. In legal circles, this is what is called playing “fast and loose” with the facts when one is trying to be charitable to an opposing counsel’s contrived argument.

Other performance highlights included: (1) completing desk audits within 40 days; (2) completing 89 percent of complaints within “the standard timeframe;” and (3) an aged case rate below 15 percent. A chart on page 26 reports OFCCP’s “Workload and Performance Summary,” including the “Percent of Aged Supply Service Compliance Evaluations Open.”

However, OFCCP reported both that it got slower and will get slower in the future as the agency “fell significantly below target on its timeliness measures for median days to process S&S cases without discrimination violations and median days to process S&S cases with discrimination violations, prior to enforcement referral, at 312 and 1,294 days, respectively.” According to the agency, this “was due to several factors including staffing levels [which OFCCP earlier reported at full budget authorization], contractor delays in providing requested information [this has been a constant over time…for decades], and unprecedented complexity of several discrimination cases.” [How many Compliance Officers did those “several” cases consume?] Consequently, OFCCP “has increased the FY 2023 target to 1,200 for median days to process S&S cases with discrimination violations, prior to enforcement referral.” [By the way, 1,200 days is over three years of running time. OFCCP’s Rules from 1972 to 2000 required audits to be completed in 60 (calendar) days, including full on-site audits which typically lasted 3-5 days per audit for Supply & Service contractors].