Contractors Seeing FCCM Changes in Audits

Several contractors currently under audit by the OFCCP have started receiving new “acceptability” analysis reports from the agency, detailing what the OFCCP investigator views as “unacceptable,” how to “fix” the submission, and deadlines for doing so.

That’s because the OFCCP has made a LOT of changes to the Federal Contract Compliance Manual (FCCM), the document they use to train-up agency investigators. Fortunately, the OFCCP tracks these changes and you can see for yourself how extensive they are here.

The OFCCP has actually long required investigators to confirm that each item requested by the Scheduling Letter and Itemized Listing were received, complete, and “acceptable,” but the revised FCCM puts that process in the spotlight.

The changes are multifaceted, aiming to align the FCCM with: the current Scheduling Letter and Itemized Listing; the agency’s still relatively new Case Management System (CMS); and the agencies current enforcement priorities and strategies.

And while the list of changes is long and appears to include lots and lots of substantive updates, that is not actually the case.

Overall “Highlights”

There are over 50 changes noted by the OFCCP and we detail several below, but here are the “highlights,” if that is the correct term:

• Audit submission “acceptability” analyses are newly emphasized and made more formal;
• More robust guidance provided for the “acceptability” of particular items (see below);
• The OFCCP will no longer “suspend” an audit for incomplete or “unacceptable” submissions and will analyze whatever information, documents, and data they do receive;
• Eliminate extensions historically given to provide “support data” or when OFCCP’s jurisdiction is challenged;
• OFCCP tightened its own target desk audit completion time from 45 days to 40;
• Appears to signal the agency will no longer randomly choose audits to be “full” audits, regardless of desk audit findings; and
• The elimination of the “SCER,” the Standard Compliance Evaluation Report (in favor of the agency’s new CRM).

Acceptability “Highlights”

There are 14 instances where the revised FCCM provides different or new information for OFCCP investigators to consider when assessing the “acceptability” of a particular item. These are all discussed in more detail below, but here are the “highlights”:

Organizational Profile – No substantive changes, but revisions may cause OFCCP investigators to more strictly enforce the pay sort order (low to high) and the separate identification of “lines of progression.”

AAP Job Groups – Recognizes that higher education institutions use IPEDS, not EEO-1 categories to begin forming job groups; includes unsupported minimum job group size “requirement.”

“Utilization” Analyses – Provide everything necessary for the OFCCP to verify all calculations (external and internal availability, recruiting areas and feeders, factor weights, etc.).

Placement Goals – Yes, the OFCCP is requesting goals from both the prior and current AAP.

Action-Oriented Programs – The OFCCP wants to see how you developed your action plans (factors considered, reasoning, etc.).

Six-Month Update Data – Six months is the threshold, but submit for as many full months as you are into your current AAP cycle, not just six months.

Employment Transaction Summaries – Break them down by individual race/ethnicity, please.

Compensation Data – Yes, OFCCP is asking for two compensation “snapshots.” No, you are not allowed to limit the population to employees who show up in both.

Compensation Analysis – Simply mirrors Itemized Listing paragraph 22.

Artificial Intelligence Information – Provides more detail on what OFCCP investigators expect; includes questionable requirement to provide written summaries of policies/practices if no formal written policy exists.

Review of Personnel Processes – This requirement is still vague, and the FCCM updates do not provide much clarity.

Outreach and Positive Recruitment (disability and veterans) – Provides more detail on what OFCCP investigators expect to see, but 3 of the 4 examples are unhelpful.

Disability Utilization Goal Analysis – Similar to placement goals, the OFCCP wants to understand how you developed any resulting action plans and expects you to discuss what you submitted for Itemized Listing paragraphs 8 (outreach assessment), 9 (audit and reporting system), and 25 (assessment of personnel processes)

VEVRAA Job Listing Requirement – Misstates the requirement implying that all jobs should be listed, not mentioning the exceptions in the regulations.

For more detail and analysis of the above “highlights,” read on. And if you have any questions about any of these items, feel free to reach out to us at BAI@berkshireassociates.com.

“Acceptability”

As noted, the OFCCP has long required investigators to document that each item requested by the Scheduling Letter and Itemized Listing were both received and “acceptable,” as evidenced by the now defunct SCER:

If any particular item requested is missing from the initial submission, the OFCCP would deem the entire submission “unacceptable,” but the FCCM also provides a fair amount of detail for assessing the acceptability of each particular item. In some cases, this guidance does not change at all, or does not change substantially. In other cases, the changes are more “robust.”

Note that many sections appear to have additional content in the revisions, but that is often a mirage. The OFCCP simply decided to integrate most footnotes into the main text, so often the guidance has not actually changed, you just don’t have to scan down to the footnotes to get the full picture.

Note also that the SCER is being replaced by the CRM, which allows for more strict and uniform control of how audits are conducted. OFCCP investigators will likely now be required to tick every “acceptability” box, and provide supporting documentation, in order to proceed further with the audit. And from what we have learned about the CRM, it is unlikely that investigators can simply get manager approval to proceed if there are remaining questions about items in the desk audit submission. In other words, this is a “threshold” analysis that OFCCP investigators must conduct and likely cannot proceed further until it is complete, leading to contractors receiving these “acceptability” reports with demands to “cure” unacceptable items and short deadlines for doing so.

Organizational Profile Acceptability

About the only real change to the FCCM regarding the acceptability of the Organizational Profile is found in regard to the Workforce Analysis in particular. Guidance regarding the Organizational Display (org chart option) remain unchanged.

The FCCM always instructed that job titles listed on the Workforce analysis be ordered by pay from lowest- to highest-paid, as required by the regulations. Historically, though, the OFCCP has readily accepted the opposite sort order so long as the contractor is transparent and consistent. When the OFCCP makes these types of changes and highlights particular issues for investigators, we tend to see more strict adherence to the text. Accordingly, contractors may receive push-back if they submit a Workforce Analysis sorted high to low. Don’t be surprised if the OFCCP insists that such contractors re-do the report with the “correct” sort order.

And when “lines of progression” are fairly obvious from things like job names (e.g., Customer Service Rep I, Rep II, Rep III, etc.), and or when there are collective bargaining agreements involved, the OFCCP has historically not been strict about contractors separately identifying progression paths. That could also change with the agency’s renewed emphasis on “acceptability” analyses.

Job Group Acceptability

OFCCP investigators were always instructed to make sure that contractors do not “mix” jobs reported in separate EEO-1 job categories in the same AAP job group. For the first time, the OFCCP has added IPEDS to the mix. Higher education institutions do not file EEO-1 reports and instead use the Integrated Postsecondary Education Data System.

Smaller contractors that do file EEO-1 reports can simply adopt the EEO-1 job categories as their AAP job group structure, and are only expected to “split” EEO-1 categories into more specific groupings as the organization grows. For Higher Education, the same applies but using IPEDS categories. The FCCM now reflects that.

Unfortunately, the OFCCP failed to fix some imprecise language with regard to AAP job group size. The FCCM, both “old” and “new,” state that “Job Groups Must Permit Meaningful Analysis” (emphasis added). The document goes on to say that job groups “should have enough incumbents to permit meaningful utilization analyses and goal setting” (emphasis ours again).

So which is it, “must,” or “should?” Well, a quick reading of the underlying regulations clearly reveals the proper word here is “should,” and we hope the OFCCP will continue to bear that in mind. Because the only thing here that is actually enforceable on federal contractors is the regulations, not the agency’s guidance, and not the FCCM. There is no regulatory requirement that AAP job groups contain some minimum number of employees. If you only have one IT tech, you only have one IT tech, and they may rightfully reside in an AAP job group of one.

Utilization Analysis Acceptability

The FCCM is about the only place you will still find the OFCCP referring to the “utilization analysis,” because the agency dropped that nomenclature in their regulations almost a quarter century ago. Trouble is, they replaced it with, “the comparison of incumbency to availability,” which is a mouthful, and most people still colloquially refer to it as the “utilization analysis.”

The only substantive addition here is a note reading, “To be an acceptable submission, contractors must provide documentation demonstrating their determination of minority and female availability and consideration of the above factors.” The “above factors” refers to external and internal availability calculations. In other words, the OFCCP still doesn’t care exactly how you split out your availability reports and analyses, so long as they can check your math at every step. And they do, by the way, literally check your math with a calculator, so if they don’t have what they need to do that, expect to hear about it.

Placement Goals Acceptability

The Itemized Listing has always requested information on the prior year AAP, while the Scheduling Letter requested copies of your current AAPs. Somehow, this confused contractors into thinking they only need to submit placement goal information for the current year, but that has never been the case and the OFCCP has made updates to the Itemized Listing to clarify. Now they have updated the FCCM so your investigator knows to expect both.

They need the goals from the prior year in order to assess your “progress” toward those goals and determine whether or not they need to evaluate the sufficiency of your “good faith efforts.” They also need the goals from the current year in order to check the box for confirming that the contractor is currently in compliance with the obligation to set placement goals.

Action-Oriented Programs Acceptability

This section is unchanged except for a blink-and-you’ll-miss-it addition. The revised FCCM now notes, “To be an acceptable submission, contractors must provide documentation demonstrating the development of these action-oriented programs.”

The FCCM does not provide much in the way of guidance regarding how to evaluate whether or not a particular action plan is “acceptable,” and never has. But the OFCCP is awfully curious about how you landed on this or that action plan, and they want to see your reasoning.

Being able to tie the “actions” in your action plan to specific metrics from your AAP is ideal. What the FCCM and OFCCP fail to recognize is that in most instances, the “why” for a particular demographic disparity is most often unclear, and the action plan becomes an exercise in the process of elimination to determine whether or not there are any “artificial barriers” to remove. But often your action plan is exactly that—actually part of your “identification of problem areas” obligation. Setting a placement goal in and of itself is not the same thing as identifying a “problem area.” It is simply the setting of a survey marker indicating where you intend to investigate.

So if your action plan is part of your investigation—and most often it is—you may need to say that in the action plan itself.

Six Month Update Data Acceptability

The OFCCP has been talking about this for a number of years, but somewhat inexplicably have not made appropriate updates to the language used in the Itemized Listing (which is controlling), or even their FAQs.

The Itemized Listing clearly states that, for certain items, if you are six months or more into your current AAP cycle when the Scheduling Letter arrives, you need to provide “at least” six months’ worth of data from the current cycle as well (this is often referred to as “update” data).

In the revised FCCM, they instruct investigators that what they mean is if you are six months in, provide six months. If you are seven months in, provide seven months, etc. And they have been telling contractors that informally at events such as the NILG for several years. And that may very well be what they mean, but it is still not what they say.

Rather than update the Itemized Listing, or even their informal guidance to contractors, the OFCCP is effectively telling its investigators to treat contractors’ legitimate interpretations of the Itemized Listing demands as “non-compliance.”

Employment Transaction Summary Acceptability

The prior FCCM noted that contractors must submit applicant, hire, promotion, and termination summaries broken down by total transactions, female transactions, and minority transactions. With those numbers, one can easily calculate the same for men and Whites*, if necessary.

But the updated FCCM now instructs that to be acceptable, the transaction summaries need to be broken down by individual race/ethnicity category, and does not require a separate calculation for “minorities.”

Looking Ahead

The next few years are expected to be a time of change for administrative agencies, not just the OFCCP, and regardless of who next wins the White House. Agencies like the OFCCP will need to be nimble as they play both offense and defense as we re-examine administrative authority more broadly in the federal courts.

We will, as always, keep a close eye and bring you the latest developments. In the meantime, if you have any questions about this or any other OFCCP-related matter, please do not hesitate to reach out to us at BAI@berkshireassociates.com.

*Note that Berkshire capitalizes all “official” EEO-1 race category designations, whether or not they are a proper noun, consistent with longstanding EEOC practice.