Client Advisory

OFCCP Launches 2006 Compliance Process

The Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) is continuing the process that it began last year of selecting contractors for compliance evaluations through its Federal Contractor Selection System (FCSS).  The list of contractors to be evaluated during 2005-2006 was finalized on September 23, 2005.  As it did last year, the OFCCP will provide a heads-up to contractors by sending Corporate Scheduling Letters to parent organizations that have two or more establishments selected for compliance evaluations.  The OFCCP plans to send approximately half of these letters now and the remainder in early 2006.

The Corporate Scheduling Announcement Letter does not initiate the evaluation, but rather provides contractors with advance notice that the establishments listed will be evaluated sometime during the next 12 months, thus allowing them to prepare more effectively.  Instead of making a headlong effort to remedy potential problem areas just prior to an evaluation, a contractor can conduct necessary self-audits of its Affirmative Action Programs, impact ratio analyses of personnel activity, compensation analyses, management training, and recruitment outreach, all in a manner that is more cost-effective and more likely to pass muster with the OFCCP.

Contractors who do not receive the Corporate Scheduling Announcement Letter should not assume that they have avoided a compliance evaluation this year.  If only one of a contractor’s establishments is chosen, the contractor will not have notice until the actual scheduling letter arrives, affording it only 30 days to submit documents for the desk audit portion.  In addition, contractors who have entered into Functional Affirmative Action Program Agreements will be selected for review under a separate process and will not receive pre-notification letters.  All contractors with Functional Affirmative Action Program Agreements should expect to be scheduled for a compliance review in 2006.

The fact that audits may take place on 30 days' notice is but one good reason for contractors to assess their readiness for a compliance review.  The OFCCP continues to focus on compensation practices during compliance evaluations, consistent with its November 10, 2004 Guidelines, and it is prudent to allocate staffing and budget to conduct a least a threshold self-assessment of compensation across your company in the near future.  Finally, contractors should begin to consider what efforts may be required to comply with the OFCCP's recently released final regulations relating to the definition of an Internet Applicant and associated record-keeping requirements.  These regulations will be effective February 6, 2006.

If you have any questions or would like more information on the letter or steps that your company should take to prepare for an evaluation, please feel free to call: Beth Schallop Call at 602-257-5200.