1A Introduction

OFCCP may conduct a compliance evaluation that consists of one, or any combination of, the following investigative procedures:

• Compliance review;
• Off-site review of records;
• Compliance check; and
• Focused review.

Each of the investigative procedures is discussed in this chapter;2 the first is compliance review procedures. A compliance review is a comprehensive analysis and evaluation of the employment practices of the contractor, including the contractor’s written affirmative action program (AAP), and the results of the contractor’s affirmative action efforts. A compliance review may proceed in three stages:

• Desk audit;
• On-site review; and
• Off-site analysis.

However, the regulations do not require an on-site review or off-site analysis in all cases. Depending on the circumstances or the results of the desk audit, a compliance review may:

• Close after the desk audit;
• Continue with an on-site review; or
• Continue with an off-site analysis of the information gathered during or pursuant to the on-site review.

An off-site review of records is an analysis and evaluation of all or some portion of the contractor’s AAPs and supporting documentation, and other documents related to the contractor’s personnel policies and employment actions that may be relevant to a determination of whether the contractor complied with the requirements of Executive Order 11246, Section 503 and/or VEVRAA, as appropriate. COs must use the desk audit procedures outlined in this chapter when conducting an off-site review of records.

A compliance check is an examination to determine whether a contractor maintained certain records as required by the regulations at 41 CFR 60-1.12, 41 CFR 60-300.80, and 41 CFR 60-741.80. The contractor has the option of providing the documents either on-site or off-site. Therefore, COs3 must contact the contractor to determine whether the requested records will be provided on-site or off-site. COs will also need to contact the contractor during the review if they need specific issues clarified. A compliance check need not include an on-site review. If a contractor provides records off-site, but a CO finds that it may be appropriate to conduct a physical, on-site inspection, the CO must discuss the matter with his or her supervisor.4

Finally, a focused review is an on-site review focused on one or more components of the contractor’s organization, or one or more aspects of the contractor’s employment practices. OFCCP may conduct a focused review to determine the contractor’s compliance with a particular legal authority or may conduct a focused review of a particular employment practice under all of the laws OFCCP enforces.5 For example, in a Section 503 focused review, the CO would review policies and practices of the contractor related solely to Section 503 compliance. OFCCP will identify the subject of the focused review and inform the contractor before the start of the review.

This chapter outlines the procedures COs use to conduct a desk audit during a compliance evaluation, whether it is conducted in the office or on-site. The elements of this chapter also apply when COs are conducting compliance evaluations using the investigative procedures for the off-site review of records. Additionally, this chapter references the relevant sections of the Standard Compliance Evaluation Report (SCER) that COs must complete during the desk audit stage of compliance evaluations.

By conducting a desk audit of the contractor’s AAPs and supporting documentation provided by contractors, a CO begins to determine whether a contractor is complying with all relevant provisions of 41 CFR Chapter 60, specifically:

• Applicable nondiscrimination provisions; and
• Applicable affirmative action provisions.

A desk audit typically enables COs to review a contractor’s compliance with its affirmative action and equal opportunity obligations at a particular establishment. COs must conduct desk audits following these general principles:

a. Equal Employment Opportunity (EEO). A contractor’s personnel policies and practices must not have the purpose or effect of discriminating because of race, color, religion, sex, sexual orientation, gender identity, national origin, disability or status as a protected veteran, or because they discussed, inquired about, or disclosed their pay or, in certain circumstances, the pay of other employees. Contractors must eliminate and remedy discrimination that, for example, limits a job applicant’s or an employee’s ability to engage in open and fair competition for a job or position, or that results in paying employees differently based on race, sex or membership in other protected classes.

b. Affirmative Action Program. An AAP is a management tool. The written AAP includes diagnostic and self-monitoring components as well as a set of specific and result-oriented policies and procedures designed to achieve EEO.

c. Inclusion and Acceptability. An AAP is assessed for “inclusion” and “acceptability.” This chapter discusses these concepts more fully in sections 1E – 1H of this chapter.

When conducting the desk audit, COs focus on a review of the following areas:

a. Workforce Structure, Personnel Policies and Procedures. COs examine a contractor’s personnel policies and procedures to determine if they warrant in-depth investigation, such as an on-site review. Likewise, an examination of a contractor’s basic organizational or workforce structure may reveal irregularities that merit investigating.

b. Problem Areas and Action-Oriented Programs. COs examine whether a contractor identified any problem areas, and, if so, whether the contractor developed and executed action-oriented programs designed to correct the problem areas. In doing so, COs should seek to determine at least these specific things:

• Whether there are any areas with a lack of progress toward established goals;
• Whether further information is needed in any area; and
• Whether an on-site visit is needed to evaluate the contractor’s efforts to develop and implement AAPs designed to improve opportunities for minorities, women, people with disabilities and protected veterans.

c. Potential Discrimination. COs must be aware of the signs of potential discrimination. Being aware of and alert to these signs allows a CO to assess when further investigation is required. Below are examples of signs of potential discrimination.

• Individuals in a particular race, sex, or ethnicity are significantly overrepresented or underrepresented in a particular area of the workforce.
• Indications exist that an employment practice or procedure has adversely affected individuals based on their race, sex, or ethnicity.
• Compensation practices of a contractor result in differences in pay that appear to be based on race, sex, or ethnicity.
• Indications exist that leave for family caregiving is applied differently for men and women.
• The contractor has policies that could adversely affect employees with disabilities, such as a “no leave” policy or a policy requiring 100% recovery before allowing an employee to return to work.

The SCER is a tool used by COs to conduct and document desk audits. The SCER and its instructions, found in Appendices A-1 and A-2, establish a framework for conducting the desk audit and assisting in the development and implementation of the on-site investigative plan. COs use the SCER, either in whole or in part, when conducting a compliance evaluation using the compliance review, off-site review of records or focused review investigative procedures discussed in subsection 1A00 of this chapter. Compliance checks require the completion of the Compliance Check Control Sheet, rather than the SCER.6

The SCER begins with a Contractor Information section in which the CO records basic information about the contractor, including address, company contacts, type of industry, contract coverage, and workforce composition. After the Contractor Information section, there is a Case Summary and Recommendations section that serves as the final assessment of the compliance evaluation, listing all findings. These two sections are then followed by three main parts.7

a. Part A: Preparation. Part A includes general information gathered by the CO during the preparatory stages of a compliance evaluation, such as the contractor’s problems in prior compliance evaluations, information on known complaints or enforcement proceedings, and any collaboration with or referrals to other agencies during the compliance evaluation.

b. Part B: Desk Audit. Part B records the results of the CO’s desk audit. It documents the CO’s initial review of the contractor’s AAPs and Itemized Listing data for inclusion and acceptability, and summarizes any problems the CO finds regarding the acceptability of the AAPs and Itemized Listing data, and provides resolutions for those problems. Part B also provides for analysis of Executive Order 11246 affirmative action progress and identifies any areas where a CO needs additional information to determine the extent of a contractor’s good faith efforts. This Part also includes an assessment of a contractor’s Section 503 utilization analysis and outreach assessment, as well as the VEVRAA outreach assessment. The CO also records results of the analyses performed on the employment activity provided by the contractor (e.g., terminations, compensation) and notes any other problems for an on-site investigation. For any problem unresolved at the conclusion of the desk audit, the SCER requires the development of an On-Site Plan.8

c. Part C: On-Site Review. Part C records the results of an on-site review. It provides for the CO to document verification of the contractor’s implementation of certain equal opportunity clause requirements (e.g., posting current required EEO notices), implementation of the regulations prohibiting discrimination on the basis of sex, and implementation of the guidelines on discrimination based on national origin and religion. The CO also records the on-site review findings for any potential systemic or individual discrimination that was identified during the desk audit or discovered during the on-site review. These findings include a discussion of the nature of the problem(s), relevant evidence collected and reviewed, actions (if any) taken to resolve the problem, and whether and how the problem was resolved.

The Case Management System (CMS) is the data collection component of the OFCCP Information System (OFIS) COs use to record basic information about the contractor, to track major events encountered throughout the evaluation, and to summarize any violations found and remedies obtained. COs must ensure that all relevant dates, information, and occurrences are promptly entered into CMS, beginning with the initial scheduling of the compliance evaluation and ending with the closure of the review, including the Conciliation Agreement (CA) monitoring period, if applicable. COs should refer to the CMS Manual for further instruction on how and when to enter case status information. The reporting component of OFIS is the Executive Information System (EIS), used by COs in combination with historical records to research past OFCCP compliance evaluations.

Under current law and regulations, OFCCP is required to comply with the Freedom of Information Act (FOIA), 5 U.S.C. 552; the Trade Secrets Act, 18 U.S.C. 1905; the Privacy Act, 5 U.S.C. 552a; and Executive Order 12600.9 These laws govern the disclosure of confidential information, as well as sensitive information, such as personnel records, medical information and salary data. During a compliance evaluation, a CO will handle contractor information that is not available to the general public and that may be sensitive (e.g., social security number, date of birth, employee-level salary data) or nonsensitive (e.g., first and last name, business address, email address) in nature. The CO must treat all information obtained during a compliance evaluation as confidential and protect the security of records to avoid any unauthorized disclosure. The CO is also responsible for the proper handling of Personally Identifiable Information (PII) under the U.S. Department Of Labor’s 9 DLMS 1200 (Safeguarding Sensitive Data Including Personally Identifiable Information).

Under FOIA, members of the public may request the release of agency records. If a CO receives a request for disclosure of any records obtained from a contractor, the CO must immediately refer the request to OFCCP’s designated regional or national FOIA coordinator, as appropriate. The FOIA coordinator must evaluate the request to determine whether any exemptions from disclosure apply or if the agency is required to release records that OFCCP received from a federal contractor. Before releasing any records provided by the contractor, the FOIA coordinator will notify the contractor of its opportunity to object to a release of records.

For instance, OFCCP will notify contractors of any FOIA request for their EEO-1 data. If a contractor objects to disclosure, then OFCCP will not disclose the records if OFCCP determines that the contractor’s objection is valid. FOIA exemption 4 recognizes the confidentiality of this data and, in combination with FOIA exemption 3 and the Trade Secrets Act, provides the necessary tools to protect it from public disclosure, if appropriate.

Novel issues are those that are unfamiliar, unique or fall outside the norm. Periodically, the national office will identify certain novel issues and develop specific procedures to address them. COs may encounter novel issues in a compliance evaluation. When this occurs, they must, in coordination with their supervisor and regional office, contact the Division of Program Operations (DPO) in the national office to determine the approach to use, data to obtain and analyses to conduct before recommending a finding of compliance or noncompliance. Novel issues include those not routinely addressed, like a publicly announced contractor preference in employment to Indians and Native Americans living on or near an Indian or Native American Reservation.10 Novel issues could also include compliance evaluations that involve coordination with the Expert Services Branch in DPO on issues like testing, multi-establishment contractors, and complex or unusual compensation issues. Chapter 6 of this Manual includes a brief discussion of novel issues in the context of complaint investigations.

Under the regulations at 41 CFR 60-2.30 on corporate management compliance evaluations (CMCEs), COs may conduct a CMCE to ascertain whether individuals are encountering artificial barriers to advancement into mid-level and senior corporate management. The desk audit procedures outlined in this chapter apply to CMCEs. We discuss CMCEs in Chapter 4 of this Manual.

Under the regulations at 41 CFR 60-2.1(d)(4), a contractor can seek the agency’s agreement to develop and use an AAP that is based on a functional or business unit instead of an establishment. This type of AAP is called a functional AAP or FAAP. The desk audit procedures outlined in this chapter apply to both traditional and functional AAPs. We discuss FAAPs in Chapter 5 of this Manual.

Under the regulations at 41 CFR 60-1.20(d), 60-1.29, 60-300.60(d), and 60-741.60(c) on preaward compliance evaluations, an agency is required to notify OFCCP and request a preaward evaluation before a nonconstruction contract or first tier subcontract of $10 million or more is awarded. Within 15 calendar days of the notice, OFCCP will inform the awarding agency of its intent to conduct a preaward compliance evaluation. If OFCCP informs the agency of its intent to conduct a preaward evaluation, OFCCP is allowed an additional 20 calendar days after that date to provide a conclusion relative to the contractor’s compliance.

If an educational institution holds a federal contract, it may be scheduled for a compliance evaluation. While the desk audit procedures and principles in this chapter apply to educational institution evaluations, the CO should consider the unique nature of these contractors. Educational institutions have the same obligation as other contractors to prepare and maintain AAPs and submit them along with Itemized Listing data when scheduled for a compliance evaluation. However, the data submitted by an educational institution may be structured differently and include identification of employment practices that are unique to them. Despite any differences in the nature of educational institutions compared to other contractors, the CO will evaluate the contractor’s compliance with all applicable regulations and conduct required analyses, such as impact ratio, compensation, selection process, and selection criteria analyses.

a. Institution type and organizational structure. When evaluating an educational institution, the CO should identify the institution type and its organizational structure, identifying autonomous components and individuals who have the authority to make personnel decisions. Educational institutions fall generally into four types: universities, senior colleges, vocational colleges and junior/community colleges. The structure varies not only based on the type and size of the institution but also on whether it is a public or private entity. This may impact how personnel data is grouped and how employment practices are analyzed.

b. Employment data and workforce composition. In educational institution evaluations, the CO will examine data regarding the educational institution’s workforce composition, tenure requirements, and practices on hiring, promotion, termination, and compensation. Unlike other contractors, the labor force of educational institutions is tracked through a reporting system called the Integrated Postsecondary Education Data System (IPEDS).11 The CO may start with the IPEDS categories to identify similarly situated employee groups but if they are too broad, the CO will narrow down the categories to more appropriate job groups to conduct meaningful analyses. Educational institution workforces generally include instructional staff and noninstructional staff.12 The instructional staff workforce includes nontenure track, tenure track, and tenured instructional staff while the noninstructional staff workforce includes executive, administrative, professional, technical, clerical, and all other nonteaching services at the institution. Whereas instructional staff are typically grouped by department or school, noninstructional staff may overlap or spread across the educational institution.

c. Hiring, terminations and promotion practices. Evaluating employment practices applicable to noninstructional staff is similar to that conducted in other compliance evaluations. However, evaluating employment practices concerning instructional staff may present a unique challenge requiring the CO to tailor inquiries, data requests and the required analyses. For example, instructional staff vacancies may be filled by departmental committees that are formed to recruit and screen for a vacant position. Candidates deemed qualified by the committees are submitted to the Dean or Provost for selection. Academic policies and procedures regulate who will be on the committees, where to advertise and the organizations from which to solicit candidates; and procedures and criteria to follow in instructional staff selection.

In addition to the hiring, termination and promotion practices, the granting of tenure to instructional staff and applicable tenure requirements and data should be examined by the CO. Tenure is protected academic status intended to grant instructional staff permanent appointments. Promotion for tenure track instructional staff usually follows a line of progression such as assistant professor, to associate professor, to professor. Comparable to hiring, the decision to grant tenure to an instructional staff member is made by a departmental committee. Some of the common criteria considered for granting tenure include: teaching ability and effectiveness; research and publications; professional services; and services to the institution or community. Not granting tenure or revoking tenure is an adverse employment action that may further result in the termination of the instructional staff member. As with hiring, termination, and promotion practices, it may be necessary to request data on tenure decisions.

d. Compensation. Educational institutions typically operate separate pay systems for each workforce, e.g., instructional staff and noninstructional staff. There are also different pay systems to reflect the different workforces when the educational institution is a public institution. The CO must obtain written policies and procedures on employee compensation, including policies on determining base salary, pay incentives, pay increases, bonuses and other factors impacting compensation such as union status and payment for additional responsibilities at the institution. In addition to base salary and bonuses, the CO should gather data on factors that may affect compensation such as the national ranking of the educational institution, field of study, scholarship, research, publications, honors and awards.