The OFCCP has recently published two important notices in the Federal Register to drastically modify the information the agency collects from construction contractors, and in doing so signaling some potentially troubling policy changes.
In particular, the OFCCP is overhauling the construction audit Scheduling Letter and Itemized Listing, and it appears that the agency is going to start performing impact ratio analyses (IRAs) on construction employment transaction data during audits. That includes the big three, of course—hiring, promotions, and terminations—but also layoffs and recalls. The agency proposes to start demanding proof that the contractor has “monitored” it’s “employment selection” processes in an audit as well.
The OFCCP is also proposing to reinstate Form CC-257, requiring construction contractors to submit monthly reports on work hours for construction trade employees by sex and race/ethnicity. This form was suspended back in 1995 due to the overwhelming volume of reports requiring review by OFCCP personnel. With their new online management system, the agency appears optimistic they can once again handle the processing of these forms.
Finally, the agency is updating the Construction Contract Award Notification Requirement, specifically Form CC-314.
The proposed changes are discussed in more detail below, but this represents a continued effort on the OFCCP’s part to update policies without actually doing the hard work of updating their foundational regulations. And that, we find continually disappointing.
The agency’s regulations implementing Executive Order 11246 for supply and service contractors have not been significantly updated since the turn of the century, and the agency’s construction regulations have not been updated at all since 1978. Both are woefully out of date to the point that the lack of revision regularly leads to unnecessary confusion and issues for both the OFCCP and the contractors it regulates. Continually “clarifying” what the OFCCP now thinks their antiquated regulations really mean in forms and standard audit letters just opens the agency to legal threats, at a moment in time when the agency should be actively avoiding challenges to its authority. But what do I know? My job only depends on the agency continuing to exist, so maybe I’m conflicted.
Let’s see what they’re up to in a little more detail.
Proposed Revisions to the Construction Audit Scheduling Letter
About the most interesting thing surrounding construction audits over the last few decades is that they happen at all. The OFCCP clearly does not like performing construction audits for very good reasons, including the fact that the regulations are confusing to the point even OFCCP compliance officers are unsure what is required of construction contractors.
And, “not for nothing,” as they say, there isn’t really that much to audit. The “16 steps” are basically technical requirements, and the agency has historically not spent much time trying to analyze employment transactions or compensation the way they do in a supply and service audit. But that is about to change.
The proposed revisions to the construction Scheduling Letter and Itemized Listing would result in contractors submitting much more detail regarding compensation, hiring, promotions, terminations, layoffs, and recalls. And the OFCCP is explicit that these changes are meant to enhance their ability to detect potential discrimination in those practices.
For example, the current Itemized Listing requests 11 data points on compensation. The proposed revised document would add 6 more for a total of 17, which should allow the agency to “drill down” farther and perform more robust compensation analyses.
With regard to employment transactions, the agency has traditionally examined by trade, to the extent that they look at the transactions closely at all. The proposed revisions would allow them to analyze hiring, etc. on the job title level for the first time. Note that construction contractors do not compare incumbency to availability the way supply and service contractors do, so they are not required to form AAP job groups likewise. Somewhat ironically, the agency resists job title-level hiring analyses in supply and service audits, preferring to use broader AAP job groups for these analyses.
And in an apparent effort to ensure accurate analysis of your employment transaction data, the proposed revised Scheduling Letter would also demand all EEO policies, including policies on employee agreements that “impact” EEO.
They are also adding two new items to the Itemized Listing. New paragraph 16 would require contractors to identify all tests and selection procedures used in hiring and provide evidence of validation where necessary. New paragraph 17 would require contractors to provide evidence they are monitoring employment selection decisions to ensure seniority practices, job classifications, work assignments, etc. are not discriminatory.
The agency never directly invokes the Uniform Guidelines on Employee Selection Decisions (41 C.F.R. § 60-3), nor do they ever directly mention impact ratio analyses (IRAs), but it is difficult to imagine what else is meant by “monitoring employment selection decisions.” And it appears the agency intends to run IRAs on any and all selection processes for which it can gather sufficient data. So while supply and service contractors will still likely focus mainly on the big three (hiring, promotions, and terminations), the revised instrument indicates that construction contractors should be performing IRAs on layoffs, recalls, seniority policies, job classifications, work assignments, and “other personnel practices” that could have a discriminatory effect.
There are other, minor proposed changes that largely bring things in line with current practices on the supply and service side of the house, like noting that the Section 503 and VEVRAA portions of the submission need to include any action-oriented programs that were developed and implemented.
Just a few of those more minor proposed changes are worth noting. First, the agency wants your data in an electronic format, specifically they ask for a “database” format, but mean a “spreadsheet” format (.csv or .xlsx files). Paper submissions sent through the mail are technically still an option, but you’d better clear that with your Compliance Officer first. If they just receive a stack of paper in the mail in response to the Scheduling Letter with no heads-up, they are going to be very grumpy.
The second is a bit of a head-scratcher. The current Scheduling Letter notes that 41 C.F.R. § 60-1.20(f) allows contractors to withhold “personally identifiable information” in their submissions, including names, reasons for termination, and pay data. Contractors are allowed by regulation to “code” or “index” such data, and the OFCCP can view the “uncoded” data if and when they come on site for the audit. The revised Scheduling Letter would omit that entirely, though the underlying regulation has not changed.
The OFCCP often conveniently forgets about this regulatory provision in audits and regularly demands names and contact information of current and former employees as a matter of course. So it should not be surprising that the agency would want to remove this reference from the construction audit letter. But it also highlights the problem with the agency trying to achieve regulatory updates through these “information collection requests.” Simply hiding the fact that contractors have a regulatory right to withhold personally identifiable information does not change their entitlement to that right. What it does accomplish is eroding the agency’s authority when they complain about contractors trying to “hide the ball.”
Finally, the OFCCP seems to be addressing an issue that has been driving more than a few non-construction contractors crazy—the implementation of construction audits for non-construction contractors. Yes, prime contracts for construction projects often involve supply and service contracts, but all subcontracts tend to be “coded” in the federal government’s systems according to the type of the prime contract. So from the OFCCP’s perspective, they see a “construction” contract and initiate a “construction” audit, only to find out that the contractor they selected does not construction and has not trade workers.
The current construction Scheduling Letter demands documents and information pertaining specifically to the contractor’s “trade workers,” though, so these contractors often have very little to submit. And for complicated legal reasons, the OFCCP can’t just switch the audit type to supply and service.
So the agency is proposing to update the construction Scheduling Letter to demand documents and information on all the covered trade workers, and employees “involved in supervision, inspection, and other onsite functions incidental to the actual construction.” So, for example, if you are an engineering firm that does not employe trades people, the agency will still likely demand documents and information on your non-trades employees connected to a “construction” contract.
Revival of the Monthly Employment Utilization Report
Unless you are a 30+ year veteran in the OFCCP compliance space, you may not appreciate the burden on contractors that was lifted back in 1995. But construction contractors used to have to submit monthly utilization reports to the OFCCP. All that paper overwhelmed the agency three decades ago so they suspended this information collection, but never actually eliminated it. Fast forward to 2024 when the OFCCP has some shiny new capabilities, and the agency has decided to pull this chestnut out of mothballs, dust it off, and take it for a spin again.
Here is proposed Form CC-257.
The OFCCP is convinced this should only take you an hour and a half to prepare this report, each month, for each Standard Metropolitan Statistical Area or Economic Area in which you have construction projects. For some contractors, this may very well end up constituting a full-time position.
Updated Construction Contract Award Notification
Contracting officers, applicants, and contractors are already required to submit information relevant to the contract award such as the prime contract number, name of the awarding agency, etc. The form contractors use for this is officially designated as Form CC-314. The name on the form is “Construction Contract Award Notification Requirement,” but the OFCCP actually refers to this as the “Notification of Construction Contract Award Portal (NCAP) form.”
The agency is proposing to add some detail to this form that isn’t there, but really should be. In particular, they want to add the contract type (prime or sub), NAICS code information, whether the notice is being submitted on behalf of a non-construction contractor, the Unique Entity Identifier (UEI) or DUNS number, and Employer Identification Number (EIN).
Are they proposing to update the name on the form to match how the OFCCP refers to it? No.
Looking Ahead
If the proposed changes to the construction Scheduling Letter and Itemized Listing sail through as-is, construction audits are going to get a lot more interesting. But this is just the proposal stage for all of these potential changes.
The OFCCP is collecting public comment for the next 60 days, as required. They are then supposed to review those comments and make any changes they deem necessary before submitting their final proposal to the Office of Management and Budget for approval.
If you want to submit comments (or read the comments of others) regarding the proposed revised audit letter and the proposed updated construction contract award notification form, head on over to the docket at regulations.gov here. Comments are due by Friday, April 26, 2024.
If you want to submit comments on the reinstatement and revision of the Monthly Employment Utilization Report, you can let the OFCCP know what a tremendous burden this will be by clicking here. Those comments are due by Tuesday, April 23, 2024.
